AB 3068: Adaptive reuse: streamlining: incentives.
- Session Year: 2023-2024
- House: Assembly
- Latest Version Date: 2024-09-05
Current Status:
Failed
(2024-09-27: Vetoed by Governor.)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Enacted
The Planning and Zoning Law requires each county and city to adopt a comprehensive, long-term general plan for its physical development, and the development of certain lands outside its boundaries, that includes, among other mandatory elements, a housing element. That law allows a development proponent to submit an application for a development that is subject to a specified streamlined, ministerial approval process not subject to a conditional use permit, if the development satisfies certain objective planning standards, including that the development is a multifamily housing development that contains two or more residential units.
This bill would deem an adaptive reuse project a use by right in all zones, regardless of the zoning of the site, and subject to a streamlined, ministerial review process if the project meets specified requirements, subject to specified exceptions. In this regard, an adaptive reuse project, in order to qualify for the streamlined, ministerial review process, would be required to be proposed for an existing building that is less than 50 years old or meets certain requirements regarding the preservation of historic resources, including the signing of an affidavit declaring that the project will comply with the United States Secretary of the Interiors Standards for Rehabilitation for, among other things, the preservation of exterior facades of a building that face a street, or receive federal or state historic rehabilitation tax credits, as specified. The bill would require an adaptive reuse project to meet specified affordability criteria. In this regard, the bill would require an adaptive reuse project for rental housing to include either 8% of the unit for very low income households and 5% of the units for extremely low income households or 15% of the units for lower income households. For an adaptive reuse project for owner-occupied housing, the bill would require the development to offer either 30% of the units at an affordable housing cost to moderate-income households or 15% of the units at an affordable housing cost to lower income households. The bill would require at least one-half of the square footage of the adaptive reuse project to be dedicated to residential uses. The bill would provide, among other things relating to projects involving adaptive reuse, that parking is not required for the portion of a project consisting of a building subject to adaptive reuse that does not have existing onsite parking. The bill would authorize an adaptive reuse project subject to these provisions to include the development of new residential or mixed-use structures on undeveloped areas and parking areas located on the same parcel as the proposed repurposed building, or on the parcels adjacent to the proposed adaptive reuse project site if certain conditions are met.
The bill would authorize a local government to adopt an ordinance, as specified, to, among other things, specify the process and requirements applicable to adaptive reuse projects, as specified, and would require an adaptive reuse project to comply with all objective planning standards found in the ordinance. The bill would specify that nothing in its provisions relating to adaptive reuse projects is intended to preempt the adoption or implementation of a local ordinance that provides alternative procedures and substantive requirements for adaptive reuse projects, provided that the local ordinance does not prohibit an applicant from electing to pursue an adaptive reuse project, as specified. The bill would require a local agency that has not adopted an above-described ordinance to ministerially without discretionary review approve or disapprove applications for a permit to create or serve an adaptive reuse project, as specified. The bill would, if a local governments planning director or equivalent position determines that the adaptive reuse project submitted pursuant to these provisions is consistent with the objective planning standards, require the local government to approve the adaptive reuse project within specified timeframes. The bill would require the local government staff or relevant local planning and permitting department, upon determining that the adaptive reuse project is in conflict with any of the objective planning standards, to provide the proponent written documentation of, among other things, which standard or standards the development conflicts with within specific timeframes. The bill would prohibit a local government from imposing any local development standard on any project that is an adaptive reuse that would require alteration of the existing building envelope, except as specified, whether or not the local government has adopted an ordinance.
The bill would require the proponent of an adaptive reuse project subject to these provisions to certify to the local government that specified labor prevailing wage, apprenticeship, skilled and training workforce, and health care expenditure requirements are satisfied, as specified. The bill would authorize the locality, and any labor standards enforcement agency the locality lawfully maintains, to issue a stop notice to halt further work on the project if work is proceeding in violation of any of the above-described labor standards, as specified, and to revoke a building permit if the general contractor does not show that those standards were followed.
By requiring local governments to implement the streamlined, ministerial review process for adaptive reuse projects, the bill would impose a state-mandated local program. By requiring certain development proponents of an adaptive reuse project to sign an affidavit regarding the preservation of historic resources and requiring development proponents to certify compliance with certain labor standards under penalty of perjury, the bill would expand the crime of perjury and therefore impose a state-mandated local program.
This bill would exempt an adaptive reuse project from all impact fees that are not reasonably related to the impacts resulting from the change of use of the site from nonresidential to residential or mixed use and would require any fees charged to be roughly proportional to the difference in impacts caused by the change of use.
The California Environmental Quality Act (CEQA) requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of, an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment. CEQA does not apply to the approval of ministerial projects.
This bill, by establishing the streamlined, ministerial review process described above, would exempt the approval of adaptive reuse projects subject to those processes from CEQA. The bill would also exempt specified findings regarding industrial uses and ordinances adopted to implement specified provisions from CEQA.
This bill would authorize a city or county, or city and county, commencing in the 202425 fiscal year, to establish an adaptive reuse investment incentive program to pay adaptive reuse investment incentive funds to the proponent of an adaptive reuse project approved pursuant to the streamlined, ministerial process described above for up to 30 consecutive fiscal years, as specified. The bill would define adaptive reuse investment incentive funds to mean an amount up to or equal to the amount of ad valorem property tax revenue allocated to the participating local agency from the taxation of that portion of the total assessed value of the real and personal property of an adaptive reuse project property that is in excess of the qualified adaptive reuse project propertys valuation at the time of the proponents initial request for funding.
The bill would define terms for these purposes, and would make findings and declarations related to its provisions.
The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for specified reasons.
The Planning and Zoning Law requires each county and city to adopt a comprehensive, long-term general plan for its physical development, and the development of certain lands outside its boundaries, that includes, among other mandatory elements, a housing element. That law allows a development proponent to submit an application for a development that is subject to a specified streamlined, ministerial approval process not subject to a conditional use permit, if the development satisfies certain objective planning standards, including that the development is a multifamily housing development that contains two or more residential units.
This bill would deem an adaptive reuse project a use by right in all zones, regardless of the zoning of the site, and subject to a streamlined, ministerial review process if the project meets specified requirements. requirements, subject to specified exceptions. In this regard, an adaptive reuse project, in order to qualify for the streamlined, ministerial review process, would be required to be proposed for an existing building that is less than 50 years old or meets certain requirements regarding the preservation of historic resources, including the signing of an affidavit declaring that the project will comply with the United States Secretary of the Interiors Standards for Rehabilitation for, among other things, the preservation of exterior facades of a building that face a street, or receive federal or state historic rehabilitation tax credits, as specified. The bill would require an adaptive reuse project to meet specified affordability criteria. In this regard, the bill would require an adaptive reuse project for rental housing to include either 8% of the unit for very low income households and 5% of the units for extremely low income households or 15% of the units for lower income households. For an adaptive reuse project for owner-occupied housing, the bill would require the development to offer either 30% of the units at an affordable housing cost to moderate-income households or 15% of the units at an affordable housing cost to lower income households. The bill would require at least one-half of the square footage of the adaptive reuse project to be dedicated to residential uses. The bill would provide, among other things relating to projects involving adaptive reuse, that parking is not required for the portion of a project consisting of a building subject to adaptive reuse that does not have existing onsite parking. The bill would authorize an adaptive reuse project subject to these provisions to include the development of new residential or mixed-use structures on undeveloped areas and parking areas located on the same parcel as the proposed repurposed building, or on the parcels adjacent to the proposed adaptive reuse project site if certain conditions are met. The
The bill would authorize a local government to adopt an ordinance ordinance, as specified, to, among other things, specify the process and requirements applicable to adaptive reuse projects, as specified, and would require an adaptive reuse project to comply with all objective planning standards found in the ordinance. The bill would specify that nothing in its provisions relating to adaptive reuse projects is intended to preempt the adoption or implementation of a local ordinance that provides alternative procedures and substantive requirements for adaptive reuse projects, provided that the local ordinance does not prohibit an applicant from electing to pursue an adaptive reuse project, as specified. The bill would require a local agency that has not adopted an above-described ordinance to ministerially without discretionary review approve or disapprove applications for a permit to create or serve an adaptive reuse project, as specified. The bill would, if a local governments planning director or equivalent position determines that the adaptive reuse project submitted pursuant to these provisions is consistent with the objective planning standards, require the local government to approve the adaptive reuse project within specified timeframes. The timeframes. The bill would require the local government staff or relevant local planning and permitting department, upon determining that the adaptive reuse project is in conflict with any of the objective planning standards, to provide the proponent written documentation of, among other things, which standard or standards the development conflicts with within specific timeframes. The bill would prohibit a local government from imposing any local development standard on any project that is an adaptive reuse that would require alteration of the existing building envelope, except as specified, whether or not the local government has adopted an ordinance.
The bill would require the proponent of an adaptive reuse project subject to these provisions to certify to the local government that specified labor prevailing wage, apprenticeship, skilled and training workforce, and health care expenditure requirements are satisfied, as specified. The bill would authorize the locality, and any labor standards enforcement agency the locality lawfully maintains, to issue a stop notice to halt further work on the project if work is proceeding in violation of any of the above-described labor standards, as specified, and to revoke a building permit if the general contractor does not show that those standards were followed.
By requiring local governments to implement the streamlined, ministerial review process for adaptive reuse projects, the bill would impose a state-mandated local program. By requiring certain development proponents of an adaptive reuse project to sign an affidavit regarding the preservation of historic resources and requiring development proponents to certify compliance with certain labor standards under penalty of perjury, the bill would expand the crime of perjury and therefore impose a state-mandated local program.
This bill would exempt an adaptive reuse project from all impact fees that are not reasonably related to the impacts resulting from the change of use of the site from nonresidential to residential or mixed use and would require any fees charged to be roughly proportional to the difference in impacts caused by the change of use.
The California Environmental Quality Act (CEQA) requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of, an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment. CEQA does not apply to the approval of ministerial projects.
This bill, by establishing the streamlined, ministerial review process described above, would exempt the approval of adaptive reuse projects subject to those processes from CEQA. The bill would also exempt specified findings regarding industrial uses and ordinances adopted to implement specified provisions from CEQA.
This bill would authorize a city or county, or city and county, commencing in the 202425 fiscal year, to establish an adaptive reuse investment incentive program to pay adaptive reuse investment incentive funds to the proponent of an adaptive reuse project approved pursuant to the streamlined, ministerial process described above for up to 30 consecutive fiscal years, as specified. The bill would define adaptive reuse investment incentive funds to mean an amount up to or equal to the amount of ad valorem property tax revenue allocated to the participating local agency from the taxation of that portion of the total assessed value of the real and personal property of an adaptive reuse project property that is in excess of the qualified adaptive reuse project propertys valuation at the time of the proponents initial request for funding.
The bill would define terms for these purposes, and would make findings and declarations related to its provisions.
The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for specified reasons.
The Planning and Zoning Law requires each county and city to adopt a comprehensive, long-term general plan for its physical development, and the development of certain lands outside its boundaries, that includes, among other mandatory elements, a housing element. That law allows a development proponent to submit an application for a development that is subject to a specified streamlined, ministerial approval process not subject to a conditional use permit, if the development satisfies certain objective planning standards, including that the development is a multifamily housing development that contains two or more residential units.
This bill would deem an adaptive reuse project a use by right in all zones, regardless of the zoning of the site, and subject to a streamlined, ministerial review process if the project meets specified requirements. In this regard, an adaptive reuse project, in order to qualify for the streamlined, ministerial review process, would be required to be proposed for an existing building that is less than 50 years old or meets certain requirements regarding the preservation of historic resources, including the signing of an affidavit declaring that the project will comply with the United States Secretary of the Interiors Standards for Rehabilitation for, among other things, the preservation of exterior facades of a building that face a street, or receive federal or state historic rehabilitation tax credits, as specified. The bill would require an adaptive reuse project to meet specified affordability criteria. In this regard, the bill would require an adaptive reuse project for rental housing to include either 8% of the unit for very low income households and 5% of the units for extremely low income households or 15% of the units for lower income households. For an adaptive reuse project for owner-occupied housing, the bill would require the development to offer either 30% of the units at an affordable housing cost to moderate-income households or 15% of the units at an affordable housing cost to lower income households. The bill would require at least one-half of the square footage of the adaptive reuse project to be dedicated to residential uses. The bill would provide, among other things relating to projects involving adaptive reuse, that parking is not required for the portion of a project consisting of a building subject to adaptive reuse that does not have existing onsite parking. The bill would authorize an adaptive reuse project subject to these provisions to include the development of new residential or mixed-use structures on undeveloped areas and parking areas located on the same parcel as the proposed repurposed building, or on the parcels adjacent to the proposed adaptive reuse project site if certain conditions are met. The bill would authorize a local government to adopt an ordinance to, among other things, specify the process and requirements applicable to adaptive reuse projects, as specified, and would require an adaptive reuse project to comply with all objective planning standards found in the ordinance. The bill would require a local agency that has not adopted an above-described ordinance to ministerially without discretionary review approve or disapprove applications for a permit to create or serve an adaptive reuse project, as specified. The bill would, if a local governments planning director or equivalent position determines that the adaptive reuse project submitted pursuant to these provisions is consistent with the objective planning standards, require the local government to approve the adaptive reuse project within specified timeframes. The bill would require the proponent of an adaptive reuse project subject to these provisions to certify to the local government that specified labor prevailing wage, apprenticeship, and health care expenditure requirements are satisfied, as specified.
By requiring local governments to implement the streamlined, ministerial review process for adaptive reuse projects, the bill would impose a state-mandated local program. By requiring certain development proponents of an adaptive reuse project to sign an affidavit regarding the preservation of historic resources and requiring development proponents to certify compliance with certain labor standards under penalty of perjury, the bill would expand the crime of perjury and therefore impose a state-mandated local program.
This bill would exempt an adaptive reuse project from all impact fees that are not reasonably related to the impacts resulting from the change of use of the site from nonresidential to residential or mixed use and would require any fees charged to be roughly proportional to the difference in impacts caused by the change of use.
The California Environmental Quality Act (CEQA) requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of, an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment. CEQA does not apply to the approval of ministerial projects.
This bill, by establishing the streamlined, ministerial review process described above, would exempt the approval of adaptive reuse projects subject to those processes from CEQA. The bill would also exempt specified findings regarding industrial uses and ordinances adopted to implement specified provisions from CEQA.
This bill would authorize a city or county, or city and county, commencing in the 202425 fiscal year, to establish an adaptive reuse investment incentive program to pay adaptive reuse investment incentive funds, as defined, funds to the proponent of an adaptive reuse project approved pursuant to the streamlined, ministerial process described above for up to 15 30 consecutive fiscal years. years, as specified. The bill would define adaptive reuse investment incentive funds to mean an amount up to or equal to the amount of ad valorem property tax revenue allocated to the participating local agency from the taxation of that portion of the total assessed value of the real and personal property of an adaptive reuse project property that is in excess of the qualified adaptive reuse project propertys valuation at the time of the proponents initial request for funding.
The bill would define terms for these purposes, and would make findings and declarations related to its provisions.
The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for specified reasons.
The Planning and Zoning Law requires each county and city to adopt a comprehensive, long-term general plan for its physical development, and the development of certain lands outside its boundaries, that includes, among other mandatory elements, a housing element. That law allows a development proponent to submit an application for a development that is subject to a specified streamlined, ministerial approval process not subject to a conditional use permit, if the development satisfies certain objective planning standards, including that the development is a multifamily housing development that contains two or more residential units.
This bill would deem an adaptive reuse project a use by right in all zones, regardless of the zoning of the site, and subject to a streamlined, ministerial review process if the project meets specified requirements. In this regard, an adaptive reuse project, in order to qualify for the streamlined, ministerial review process, would be required to be proposed for an existing building that is less than 50 years old or meets certain requirements regarding the preservation of historic resources, including the signing of an affidavit declaring that the project will comply with the United States Secretary of the Interiors Standards for Rehabilitation or receive federal or state historic rehabilitation tax credits, as specified. The bill would require an adaptive reuse project to meet specified affordability criteria. In this regard, the bill would require an adaptive reuse project for rental housing to include either 8% of the unit for very low income households and 5% of the units for extremely low income households or 15% of the units for lower income households. For an adaptive reuse project for owner-occupied housing, the bill would require the development to offer either 30% of the units at an affordable housing cost to moderate-income households or 15% of the units at an affordable housing cost to lower income households. The bill would require at least one-half of the square footage of the adaptive reuse project to be dedicated to residential uses. The bill would authorize an adaptive reuse project subject to these provisions to include the development of new residential or mixed-use structures on undeveloped areas and parking areas on the parcels adjacent to the proposed adaptive reuse project site if certain conditions are met. The bill would authorize a local government to adopt an ordinance to, among other things, specify the process and requirements applicable to adaptive reuse projects, as specified, and would require an adaptive reuse project to comply with all objective planning standards found in the ordinance. The bill would, if a local governments planning director or equivalent position determines that the adaptive reuse project submitted pursuant to these provisions is consistent with the objective planning standards, require the local government to approve the adaptive reuse project within specified timeframes. The bill would require the proponent of an adaptive reuse project subject to these provisions to certify to the local government that specified labor prevailing wage, apprenticeship, and health care expenditure requirements are satisfied, as specified.
By requiring local governments to implement the streamlined, ministerial review process for adaptive reuse projects, the bill would impose a state-mandated local program. By requiring certain development proponents of an adaptive reuse project to sign an affidavit regarding the preservation of historic resources and requiring development proponents to certify compliance with certain labor standards under penalty of perjury, the bill would expand the crime of perjury and therefore impose a state-mandated local program.
This bill would exempt an adaptive reuse project from all impact fees that are not directly reasonably related to the impacts resulting from the change of use of the site from nonresidential to residential or mixed use and would require any fees charged to be roughly proportional to the difference in impacts caused by the change of use.
The California Environmental Quality Act (CEQA) requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of, an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment. CEQA does not apply to the approval of ministerial projects.
This bill, by establishing the streamlined, ministerial review process described above, would exempt the approval of adaptive reuse projects subject to those processes from CEQA.
This bill would authorize a city or county, commencing in the 202425 fiscal year, to establish an adaptive reuse investment incentive program to pay adaptive reuse investment incentive funds, as defined, to the proponent of an adaptive reuse project approved pursuant to the streamlined, ministerial process described above for up to 15 consecutive fiscal years. The bill would define adaptive reuse investment incentive funds to mean an amount up to or equal to the amount of ad valorem property tax revenue allocated to the participating local agency from the taxation of that portion of the total assessed value of the real and personal property of an adaptive reuse project property that is in excess of the qualified adaptive reuse project propertys valuation at the time of the proponents initial request for funding.
The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for specified reasons.
The Planning and Zoning Law requires each county and city to adopt a comprehensive, long-term general plan for its physical development, and the development of certain lands outside its boundaries, that includes, among other mandatory elements, a housing element. That law allows a development proponent to submit an application for a development that is subject to a specified streamlined, ministerial approval process not subject to a conditional use permit, if the development satisfies certain objective planning standards, including that the development is a multifamily housing development that contains two or more residential units.
This bill would deem an adaptive reuse project a use by right in all zones, regardless of the zoning of the site, and subject to a streamlined, ministerial review process if the project meets specified requirements. In this regard, an adaptive reuse project, in order to qualify for the streamlined, ministerial review process, would be required to be proposed for an existing building that is less than 50 years old or meets certain requirements regarding the preservation of historic resources, including the signing of an affidavit declaring that the project will comply with the United States Secretary of the Interiors Standards for Rehabilitation or receive federal or state historic rehabilitation tax credits, as specified. The bill would require an adaptive reuse project to meet specified affordability criteria. In this regard, the bill would require an adaptive reuse project for rental housing to include either 8% of the unit for very low income households and 5% of the units for extremely low income households or 15% of the units for lower income households. For an adaptive reuse project for owner-occupied housing, the bill would require the development to offer either 30% of the units at an affordable housing cost to moderate-income households or 15% of the units at an affordable housing cost to lower income households. The bill would require an adaptive reuse project to comply with any broadly applicable housing affordability requirement, as defined, adopted by the local government and would require at least one-half of the square footage of the adaptive reuse project to be dedicated to residential uses, unless the project is an office conversion project, as specified. uses. The bill would authorize an adaptive reuse project subject to these provisions to include the development of new residential or mixed-use structures on undeveloped areas and parking areas on the parcels adjacent to the proposed adaptive reuse project site if certain conditions are met. The bill would, if a local governments planning director or equivalent position determines that the adaptive reuse project submitted pursuant to these provisions is consistent with the objective planning standards, require the local government to approve the adaptive reuse project within specified timeframes. The bill would require the proponent of an adaptive reuse project subject to these provisions to certify to the local government that specified labor prevailing wage, apprenticeship, and health care expenditure requirements are satisfied, as specified.
By requiring local governments to implement the streamlined, ministerial review process for adaptive reuse projects, the bill would impose a state-mandated local program. By requiring certain development proponents of an adaptive reuse project to sign an affidavit regarding the preservation of historic resources, resources and requiring development proponents to certify compliance with certain labor standards under penalty of perjury, the bill would expand the crime of perjury and therefore impose a state-mandated local program.
This bill would exempt an adaptive reuse project from all impact fees that are not directly related to the impacts resulting from the change of use of the site from nonresidential to residential or mixed use and would require any fees charged to be proportional to the difference in impacts caused by the change of use.
The California Environmental Quality Act (CEQA) requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of, an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment. CEQA does not apply to the approval of ministerial projects.
This bill, by establishing the streamlined, ministerial review process described above, would exempt the approval of adaptive reuse projects subject to those processes from CEQA.
This bill would authorize a city or county, commencing in the 202425 fiscal year, to establish an adaptive reuse investment incentive program to pay adaptive reuse investment incentive funds, as defined, to the proponent of an adaptive reuse project approved pursuant to the streamlined, ministerial process described above for up to 15 consecutive fiscal years. The bill would define adaptive reuse investment incentive funds to mean an amount up to or equal to the amount of ad valorem property tax revenue allocated to the participating local agency from the taxation of that portion of the total assessed value of the real and personal property of an adaptive reuse project property that is in excess of the qualified adaptive reuse project propertys valuation at the time of the proponents initial request for funding.
The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for specified reasons.
The Planning and Zoning Law requires each county and city to adopt a comprehensive, long-term general plan for its physical development, and the development of certain lands outside its boundaries, that includes, among other mandatory elements, a housing element. That law allows a development proponent to submit an application for a development that is subject to a specified streamlined, ministerial approval process not subject to a conditional use permit, if the development satisfies certain objective planning standards, including that the development is a multifamily housing development that contains two or more residential units.
This bill would deem an adaptive reuse project a use by right in all zones, regardless of the zoning of the site, and subject to a streamlined, ministerial review process if the project meets specified requirements. In this regard, an adaptive reuse project, in order to qualify for the streamlined, ministerial review process, would be required to be proposed for an existing building that is less than 50 years old or meets certain requirements regarding the preservation of historic resources, including the signing of an affidavit declaring that the project will comply with the United States Secretary of the Interiors Standards for Rehabilitation or receive federal or state historic rehabilitation tax credits, as specified. The bill would require an adaptive reuse project to comply with any broadly applicable housing affordability requirement, as defined, adopted by the local government and would require at least one-half of the square footage of the adaptive reuse project to be dedicated to residential uses, unless the project is an office conversion project, as specified. The bill would authorize an adaptive reuse project subject to these provisions to include the development of new residential or mixed-use structures on undeveloped areas and parking areas on the parcels adjacent to the proposed adaptive reuse project site if certain conditions are met. The bill would, if a local governments planning director or equivalent position determines that the adaptive reuse project submitted pursuant to these provisions is consistent with the objective planning standards, require the local government to approve the adaptive reuse project within specified timeframes.
By requiring local governments to implement the streamlined, ministerial review process for adaptive reuse projects, the bill would impose a state-mandated local program. By requiring certain development proponents of an adaptive reuse project to sign an affidavit regarding the preservation of historic resources, the bill would expand the crime of perjury and therefore impose a state-mandated local program.
This bill would exempt an adaptive reuse project from all impact fees that are not directly related to the impacts resulting from the change of use of the site from nonresidential to residential or mixed use and would require any fees charged to be proportional to the difference in impacts caused by the change of use.
The California Environmental Quality Act (CEQA) requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of, an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment. CEQA does not apply to the approval of ministerial projects.
This bill, by establishing the streamlined, ministerial review process described above, would exempt the approval of adaptive reuse projects subject to those processes from CEQA.
This bill would authorize a city or county, commencing in the 202425 fiscal year, to establish an adaptive reuse investment incentive program to pay adaptive reuse investment incentive funds, as defined, to the proponent of an adaptive reuse project approved pursuant to the streamlined, ministerial process described above for up to 15 consecutive fiscal years. The bill would define adaptive reuse investment incentive funds to mean an amount up to or equal to the amount of ad valorem property tax revenue allocated to the participating local agency from the taxation of that portion of the total assessed value of the real and personal property of an adaptive reuse project property that is in excess of the qualified adaptive reuse project propertys valuation at the time of the proponents initial request for funding.
The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for specified reasons.
The Legislature finds and declares all of the following:
(a)Converting vacant commercial space into residential housing, through adaptive reuse, could reduce underutilized and vacant buildings that have been decreasing in value, thereby helping to stabilize the commercial real estate market and filling those spaces with more valuable tax-generating uses.
(b)Adaptive reuse projects can increase activity and foot traffic in neighborhoods across the state, which helps support local businesses and enhance the cultural life of cities and towns.
(c)Adaptive reuse projects create new construction jobs and preserve historic structures.
(d)Adaptive reuse projects are more environmentally friendly than new construction by repurposing existing materials, reducing transportation emissions, and preserving embodied carbon.
(e)New housing construction, at all affordability levels, can help to mitigate, and eventually reverse, the statewide housing shortage.
SEC. 2.Chapter 9 (commencing with Section 51299) is added to Part 1 of Division 1 of Title 5 of the Government Code, to read:9.Adaptive Reuse Investment Incentive Program51299.It is the intent of the Legislature in enacting this chapter to provide cities and counties with opportunities to adaptively reuse existing buildings, such as office buildings, in order to facilitate their conversion to housing and mixed uses.
51299.1.For purposes of this chapter:
(a)Adaptive reuse investment incentive funds means, with respect to a qualified adaptive reuse project property for a relevant fiscal year, an amount up to or equal to the amount of ad valorem property tax revenue allocated to the participating local agency, excluding the revenue transfers required by Sections 97.2 and 97.3 of the Revenue and Taxation Code, from the taxation of that portion of the total assessed value of the real and personal property of an adaptive reuse project property that is in excess of the qualified adaptive reuse project propertys valuation at the time of the proponents initial request for funding.
(b)Program means an adaptive reuse investment incentive program established pursuant to Section 51299.2.
(c)(1)Proponent means a party or parties that meet all of the following criteria:
(A)The party is named in the application for a permit to construct a qualified adaptive reuse project submitted to the city or county.
(B)The party will be the fee owner of the qualified adaptive reuse project property upon the completion of that development.
(2)If a proponent that is receiving adaptive reuse investment incentive amounts subsequently leases the qualified adaptive reuse project property to another party, the lease may provide for the payment to that lessee of any portion of adaptive reuse investment incentive funds. A lessee that receives any portion of adaptive reuse investment incentive funds shall also be considered a proponent for the purposes of this chapter.
(d)Qualified adaptive reuse project property means an adaptive reuse project proposed pursuant to Article 11.5 (commencing with Section 65658) of Chapter 3 of Division 1 of Title 7 that is located within the city or county.
51299.2.(a)Commencing in the 202425 fiscal year, the governing body of a city or county, or city and county, may, by ordinance or resolution, establish an adaptive reuse investment incentive program pursuant to this chapter.
(b)(1)A city or county, or city and county, that establishes a program shall, upon the approval by a majority of the entire membership of its governing body of a written request therefor, pay adaptive reuse investment incentive funds to the proponent of a qualified adaptive reuse project property to subsidize the affordable housing units, as required pursuant to Article 11.5 (commencing with Section 65658) of Chapter 3 of Division 1 of Title 7, for up to 30 consecutive fiscal years. Nothing in this paragraph shall prohibit a city or county, or city and county, from paying adaptive reuse investment incentive funds to a proponent pursuant to this paragraph for a period of fewer than 30 years.
(2)A request for the payment of adaptive reuse investment incentive funds shall be filed by a proponent in writing with the governing body of the city or county in the time and manner established by that governing body.
(c)After a city or county, or city and county, approves a request for the payment of adaptive reuse investment incentive funds, payment of adaptive reuse investment incentive funds shall begin with the first fiscal year that commences after the qualified adaptive reuse property is issued a certificate of occupancy.
51299.3.A city or special district may pay to the city or county, or city and county, an amount equal to the amount of ad valorem property tax revenue allocated to that city or special district, but not the actual allocation, derived from the taxation of that portion of the total assessed value of that real property that is in excess of the propertys valuation at the time of the proponents initial request for funding, for the purpose of subsidizing the affordable housing units required pursuant to Article 11.5 (commencing with Section 65658) of Chapter 3 of Division 1 of Title 7.
SEC. 3.Article 11.5 (commencing with Section 65658) is added to Chapter 3 of Division 1 of Title 7 of the Government Code, to read:11.5.Office to Housing Conversion Act65658.This article may be cited as the Office to Housing Conversion Act.
65658.1.For purposes of this article:
(a)(1)Adaptive reuse project means the retrofitting and repurposing of an existing building to create new residential or mixed uses including office conversion projects.
(2)Adaptive reuse project shall not include any of the following:
(A)The retrofitting and repurposing of any industrial use, unless the planning director or equivalent position finds, based on substantial evidence in the record, that the building is no longer economically viable for industrial use or uses. A finding described in this subparagraph that a building for industrial use is no longer economically viable shall not be considered a project under the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code).
(B)The retrofitting and repurposing of any hotels, or any mixed-use buildings that contain hotel use, except if they have been discontinued for a minimum of five years from the date on which this article becomes operative.
(b)Adjacent portion of the project means the portion of the project located on a site adjacent to and attached to the proposed repurposed existing building, including on the same parcel as the proposed repurposed existing building.
(c)Broadly applicable housing affordability requirement means a local ordinance or other regulation that requires a minimum percentage of affordable units and that applies to a variety of housing development types or entitlement pathways.
(d)Impact fee means any fee imposed pursuant to Chapter 5 (commencing with Section 66000).
(e)Industrial use means utilities, manufacturing, transportation storage and maintenance facilities, warehousing uses, and any other use that is a source that is subject to permitting by a district, as defined in Section 39025 of the Health and Safety Code, pursuant to Division 26 (commencing with Section 39000) of the Health and Safety Code or the federal Clean Air Act (42 U.S.C. Sec. 7401 et seq.). Industrial use does not include any of the following:
(1)Power substations or utility conveyances such as power lines, broadband wires, and pipes.
(2)A use where the only source permitted by a district is an emergency backup generator.
(3)Self-storage for the residents of a building.
(f)Historical resource means the same as defined in subdivision (j) of Section 5020.1 of the Public Resources Code, or a resource listed in the California Register of Historical Resources as described in Section 5024.1 of the Public Resources Code.
(g)Local affordable housing requirement means either of the following:
(1)A local government requirement that a housing development project include a certain percentage of units affordable to, and occupied by, extremely low, very low, lower, or moderate-income households as a condition of development of residential units.
(2)A local government requirement allowing a housing development project to be a use by right if the project includes a certain percentage of units affordable to, and occupied by, extremely low, very low, lower, or moderate-income households as a condition of development of residential units.
(h)Local government means a city, including a charter city, a county, including a charter county, or a city and county, including a charter city and county.
(i)Mixed use means residential uses combined with at least one other land use, but not including any industrial use.
(j)Office conversion project means the conversion of a building used for office purposes or a vacant office building into residential dwelling units.
(k)Persons and families of low or moderate income means the same as defined in Section 50093 of the Health and Safety Code.
(l)Phase I environmental assessment means the same as defined in Section 78090 of the Health and Safety Code.
(m)Phase II environmental assessment means the same as defined in Section 25403 of the Health and Safety Code.
(n)Preliminary endangerment assessment means the same as defined in Section 78095 of the Health and Safety Code.
(o)Project labor agreement has the same meaning as set forth in paragraph (1) of subdivision (b) of Section 2500 of the Public Contract Code.
(p)Residential uses includes, but is not limited to, housing units, dormitories, boarding houses, group housing, and other congregate residential uses. Residential uses does not include prisons or jails.
(q)Urban uses has the same meaning as defined in Section 65912.101.
(r)Use by right means that the citys or countys review of the adaptive reuse project may not require a conditional use permit, planned unit development permit, or other discretionary city or county review or approval that would constitute a project for purposes of Division 13 (commencing with Section 21000) of the Public Resources Code. Any subdivision of the sites shall be subject to all laws, including, but not limited to, a city or county ordinance implementing the Subdivision Map Act (Division 2 (commencing with Section 66410)).
65658.3.(a)A local government may adopt an ordinance to implement this article and specify the process and requirements applicable to adaptive reuse projects, provided that the ordinance is consistent with, and does not inhibit the objectives of, this article.
(b)An ordinance adopted pursuant to subdivision (a) shall not be considered a project under the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code).
(c)A local agency that has not adopted an ordinance governing adaptive reuse pursuant to subdivision (a) shall ministerially without discretionary review approve or disapprove applications the local agency receives for a permit to create or serve an adaptive reuse project pursuant to this article.
(d)Notwithstanding Section 65455, any zoning ordinance authorizing adaptive reuse projects may be adopted or amended even if it is inconsistent with the adopted specific plan, and any conflicting provisions authorizing adaptive reuse projects in the zoning ordinance shall supersede the conflicted provisions in the specific plan.
(e)Nothing in this article is intended to preempt the adoption and implementation of a local ordinance that provides alternative procedures and substantive requirements for adaptive reuse projects, provided that the local ordinance does not prohibit an applicant from electing to pursue an adaptive reuse project under this article or under any ordinance adopted to implement this article.
65658.4.The Legislature finds and declares that this article addresses a matter of statewide concern rather than a municipal affair as that term is used in Section 5 of Article XI of the California Constitution. Therefore, this article applies to all cities, including charter cities.
65658.5.(a)An adaptive reuse project that meets the requirements of subdivision (b) shall be deemed a use by right in all zones, regardless of the zoning of the site, and subject to the streamlined, ministerial review process described in Section 65658.8, except that both of the following conditions apply:
(1)Any nonresidential uses of a proposed mixed-use adaptive reuse project shall be consistent with the land uses allowed by the zoning or a continuation of an existing zoning nonconforming use.
(2)Any tourist hotel uses of a proposed adaptive reuse project shall be subject to the existing approval processes required by that local jurisdiction.
(b)An adaptive reuse project shall comply with all of the following requirements:
(1)The adaptive reuse project and the site on which it is located shall satisfy both of the following:
(A)It is a legal parcel or parcels located in a city if, and only if, the city boundaries include some portion of an urbanized area, as designated by the United States Census Bureau, or, for unincorporated areas, a legal parcel or parcels wholly within the boundaries of an urbanized area, as designated by the United States Census Bureau.
(B)At least 75 percent of the perimeter of the site adjoins parcels that are developed with urban uses. For the purposes of this section, parcels that are separated by a street, highway, or any other right-of-way shall be considered to be adjoined.
(2)The adaptive reuse project is proposed for any of the following, as applicable:
(A)The project is proposed for an existing building that is less than 50 years old.
(B)The project is proposed for an existing building that is listed on a local, state, or federal register of historic resources and the adaptive reuse project proponent complies with Section 65658.7.
(C)The project is proposed for an existing building that is more than 50 years old and the local government has evaluated the site through a preliminary application submitted pursuant to subdivision (a) of Section 65658.7 and either of the following are satisfied:
(i)The local government determines that the building or site is a historic resource and the adaptive reuse project proponent complies with Section 65658.7.
(ii)The local government determines that the building or site is not a historic resource.
(3)The adaptive reuse project meets the following affordability criteria, as applicable:
(A)(i)An adaptive reuse project for rental housing shall include either of the following:
(I)Eight percent of the units for very low income households and 5 percent of the units for extremely low income households.
(II)Fifteen percent of the units for lower income households.
(ii)The development proponent shall agree to, and the local government shall require, the continued affordability of all affordable rental units included pursuant to this subdivision through a recorded affordability restriction for a period of 55 years. Rents shall be set at an affordable rent, as defined in Section 50053 of the Health and Safety Code.
(B)(i)An adaptive reuse project for owner-occupied housing shall comply with either of the following:
(I)Thirty percent of the units shall be offered at an affordable housing cost, as defined in Section 50052.5 of the Health and Safety Code, to moderate-income households.
(II)Fifteen percent of the units shall be offered at an affordable housing cost, as defined in Section 50052.5 of the Health and Safety Code, to lower income households.
(ii)The development proponent shall agree to, and the local government shall require, the continued affordability of all affordable ownership units through a recorded affordability restriction for a period of 45 years.
(C)If the local government has a local affordable housing requirement, the housing development project shall comply with all of the following:
(i)The development project shall include the percentage of affordable units required by this section or the local requirement, whichever is higher.
(ii)The development project shall meet the lowest income targeting required by either this section or the local requirement.
(iii)If the local affordable housing requirement requires greater than 15 percent of the units to be dedicated for lower income households and does not require the inclusion of units affordable to very low and extremely low income households, then the rental housing development shall do both of the following:
(I)Include 8 percent of the units for very low income households and 5 percent of the units for extremely low income households.
(II)Fifteen percent of units affordable to lower income households shall be subtracted from the percentage of units required by the local policy at the highest required affordability level.
(D)Affordable units in the development project shall have the same bedroom and bathroom count ratio as the market rate units, be equitably distributed within the project, and have the same type or quality of appliances, fixtures, and finishes.
(4)If the adaptive reuse project includes mixed uses, at least one-half of the square footage of the adaptive reuse project shall be dedicated to residential uses. For purposes of this subparagraph, square footage of the project does not include underground space, including basements or underground parking garages.
(5)(A)The local government shall, as a condition of approval of the development, require the development proponent to complete a Phase I environmental assessment.
(B)If a recognized environmental condition is found, the development proponent shall undertake a preliminary endangerment assessment, as defined in Section 78095 of the Health and Safety Code, prepared by an environmental assessor to determine the existence of any release of a hazardous substance on the site and to determine the potential for exposure of future occupants to significant health hazards from any nearby property or activity.
(i)If a release of a hazardous substance is found to exist on the site, before the local government issues a certificate of occupancy, the release shall be removed, or any significant effects of the release shall be mitigated to a level of insignificance in compliance with current state and federal requirements.
(ii)If a potential for exposure to significant hazards from surrounding properties or activities is found to exist, before the local government issues a certificate of occupancy, the effects of the potential exposure shall be mitigated to a level of insignificance in compliance with current state and federal requirements.
(6)(A)The adaptive reuse project complies with all objective planning standards found in an ordinance adopted pursuant to Section 65658.3.
(B)A local government shall not impose any local development standard on any project that is an adaptive reuse project pursuant to this article that would require alteration of the existing building envelope, except if required by any applicable local building code, regardless of whether the local government has adopted an ordinance pursuant to Section 65658.3.
(7)The acreage of the project site is 20 acres or less.
(c)An adaptive reuse project that meets all the requirements of subdivision (b) may include rooftop structures that exceed any applicable height limitation imposed by the local government, provided that the rooftop structure does not exceed one story and is used for shared amenities or equipment, including, but not limited to, shared cooking facilities, exercise facilities, common area lounges, or mechanical and stair penthouse facilities.
(d)(1)Parking shall not be required for the portion of a project consisting of a building subject to adaptive reuse that does not have existing onsite parking.
(2)This article shall not reduce, eliminate, or preclude the enforcement of any requirement imposed on a new multifamily residential or nonresidential development to provide bicycle parking, if feasible.
(3)This article shall not reduce, eliminate, or preclude the enforcement of any requirement imposed on a project that includes existing onsite parking to provide electric vehicle supply equipment installed parking spaces or parking spaces that are accessible to persons with disabilities that would have otherwise applied to the development if this section did not apply.
(e)An adaptive reuse project shall not violate the terms of any conservation easement applicable to the site.
(f)(1)A housing development proposed pursuant to this article shall be eligible for a density bonus, incentives or concessions, waivers or reductions of development standards, and parking ratios pursuant to Section 65915.
(2)For the purpose of calculating a density bonus for a project proposed pursuant to this article, the base density of an adaptive reuse project shall be the density proposed by the developer, including the portion of a project consisting of a building with a proposed change in use and any adjacent portion of the project, notwithstanding any general plan density limit as described in paragraph (6) of subdivision (o) of Section 65915.
(3)The affordability criteria described in paragraph (3) of subdivision (b) shall apply to the base density of the project, and shall not apply to any bonus units proposed pursuant to Section 65915.
(g)A housing development proposed to adaptively reuse a building shall not be eligible for a density bonus waiver or incentive that has the effect of increasing the height of the adaptively reused building above what is allowed under subdivision (c).
65658.6.(a)An adaptive reuse project that satisfies the requirements of Section 65658.5 may include the development of new residential or mixed-use structures on undeveloped areas and parking areas located on the same parcel as the proposed repurposed building, or on the parcels adjacent to the proposed adaptive reuse project site if all of the following requirements are met:
(1)The adjacent portion of the project complies with the requirements of any of the following:
(A)The requirements of paragraphs (5) and (8) of subdivision (a) of Section 65913.4.
(B)The requirements of the Affordable Housing and High Road Jobs Act of 2022 (Chapter 4.1 (commencing with Section 65912.100)), including the labor standards for construction workers in the act.
(C)The requirements of the Middle Class Housing Act of 2022 (Section 65852.24), including the labor standards for construction workers in the act.
(2)The adjacent portion of the project is located on a parcel that satisfies the requirements specified in subparagraphs (A) and (B) of paragraph (2) of subdivision (a) of Section 65913.4.
(3)The adjacent portion of the project is located on a parcel that satisfies the requirements specified in paragraph (6) of subdivision (a) of Section 65913.4, exclusive of clause (iv) of subparagraph (A), and subparagraph (K), of that paragraph.
(4)The adjacent portion of the project is located on a parcel that satisfies the requirements specified in paragraph (7) of subdivision (a) of Section 65913.4.
(5)The applicant and local agency comply with the requirements of subdivision (b) of Section 65913.4.
(6)Any existing open space on the proposed project site is not a historic resource.
(b)The adjacent portion of the project shall be eligible for a density bonus, incentives or concessions, waivers or reductions of development standards, and parking ratios pursuant to Section 65915.
(c)For purposes of this section, adjacent portion of the project means the portion of the project located on a site adjacent to the proposed repurposed existing building.
65658.7.(a)(1)Before submitting an application for an adaptive reuse project pursuant to Section 65658.5 for a structure that is more than 50 years old and not listed on a local, state, or federal register of historic resources, the development proponent shall submit to the local government a notice of its intent to submit an application. The notice of intent shall be in the form of a preliminary application that includes all of the information described in Section 65941.1.
(2)Upon receipt of a notice of intent to submit an application described in subdivision (a), the local government shall evaluate the project site for historical resources. The local government shall make a historic resource significance determination within 90 days of submission of the notice of intent for purposes of paragraph (1) of subdivision (b) of Section 65658.5.
(3)Submission of a notice of intent pursuant to this section does not constitute owner consent for determination of eligibility for the California or national registers of historic places. Any determination of historic resource significance made pursuant to this subdivision shall apply only for the purposes of this article and shall not affect or be applicable to any other law.
(b)If the adaptive reuse project is proposed for an existing building that is listed on a local, state, or federal register of historic resources or if the local government has determined that the project site is a significant historic resource pursuant to subdivision (a), the adaptive reuse project proponent shall sign an affidavit declaring that the project will only move forward if it complies with either of the following:
(1)The United States Secretary of the Interiors Standards for Rehabilitation, as found in Part 67 of Title 36 of the Code of Federal Regulations, for the preservation of exterior facades of a building that face a street, interior facades of a building that face a courtyard, and interior spaces of a building that are publicly accessible and character defining, including ground floor lobbies. Exterior facades that do not face a street, interior facades that do not face a courtyard, and interior spaces that are not publicly accessible and character defining may be modified without regard to the United States Secretary of the Interiors Standards for Rehabilitation.
(2)The project is awarded federal historic rehabilitation tax credits pursuant to Section 47 of the Internal Revenue Code, or state historic rehabilitation tax credits pursuant to Section 17053.91 or 23691 of the Revenue and Taxation Code.
(c)(1)(A)Notwithstanding subdivision (b), if the adaptive reuse project is proposed for a site that is listed on a local, state, or federal historic register and the adaptive reuse project proponent does not sign an affidavit pursuant to subdivision (b), the local government shall process the adaptive reuse project pursuant to Section 65658.8, but the local government may deny or conditionally approve the project if the local government makes a finding, based upon a preponderance of evidence in the record, that the project will cause a significant adverse impact to historic resources.
(B)A local agency may impose conditions of approval to mitigate impacts to historic resources and to comply with the United States Secretary of the Interiors Standards for Rehabilitation, as found in Part 67 of Title 36 of the Code of Federal Regulations, for the preservation of exterior facades of a building that face a street and interior spaces of a building that are publicly accessible and character defining, including ground floor lobbies, but shall not impose other conditions of approval. Exterior facades that do not face a street and interior spaces that are not publicly accessible and character defining shall not be required to be preserved according to the United States Secretary of the Interiors Standards for Rehabilitation.
(2)An adaptive reuse project pursuant to this section shall not constitute a project for purposes of Division 13 (commencing with Section 21000) of the Public Resources Code.
(d)For the purposes of this article, a local governments evaluation of a site for historical resources and review of an adaptive reuse project for consistency with the United States Secretary of the Interiors Standards for Rehabilitation shall be conducted by a person who meets the United States Secretary of the Interiors Professional Qualifications Standards, as published in Part 67 (commencing with Section 67.1) of Title 36 of the Code of Federal Regulations. Any revised professional qualifications standards adopted by the Secretary of the Interior that supersede the standards described in this paragraph shall apply.
65658.8.(a)(1)Notwithstanding any local law, if a local governments planning director or equivalent position determines that an adaptive reuse project submitted pursuant to this article is consistent with the objective planning standards specified in Section 65658.5 and Section 65658.6, if applicable, the local government shall approve the adaptive reuse project within the following timeframes:
(A)Within 60 days of the date that the project has been deemed consistent pursuant to this paragraph and paragraph (2), if the project contains 150 or fewer housing units.
(B)Within 90 days of the date that the project has been deemed consistent pursuant to this paragraph and paragraph (2), if the project contains more than 150 housing units.
(2)Upon a determination that an adaptive reuse project submitted pursuant to this section is in conflict with any of the objective planning standards specified in Section 65658.5 or Section 65658.6, if applicable, the local government staff or relevant local planning and permitting department that made the determination shall provide the development proponent written documentation of which standard or standards the development conflicts with, and an explanation for the reason or reasons the development conflicts with that standard or standards within the following timeframes:
(A)Within 60 days of submittal of the adaptive reuse project to the local government pursuant to this section if the project contains 150 or fewer housing units.
(B)Within 90 days of submittal of the adaptive reuse project to the local government pursuant to this section if the project contains more than 150 housing units.
(C)Within 30 days of submittal of any adaptive reuse project that was resubmitted to the local government following a determination of a conflict with one or more objective planning standards pursuant to this paragraph.
(3)If the local governments planning director or equivalent position fails to provide the required documentation pursuant to paragraph (2), the adaptive reuse project shall be deemed to satisfy the objective planning standards specified in Section 65658.5 and Section 65658.6, if applicable.
(4)For purposes of this section, an adaptive reuse project is consistent with the objective planning standards specified in Section 65658.5 and Section 65658.6, if applicable, if there is substantial evidence that would allow a reasonable person to conclude that the project is consistent with the objective planning standards. The local government shall not determine that an adaptive reuse project, including an application for a modification under subdivision (f), is in conflict with the objective planning standards on the basis that application materials are not included, if the application contains substantial evidence that would allow a reasonable person to conclude that the project is consistent with the objective planning standards.
(5)Upon submittal of an application for streamlined, ministerial approval pursuant to this section to the local government, all departments of the local government that are required to issue an approval of the adaptive reuse project before the granting of an entitlement shall comply with the requirements of this section within the time periods specified in paragraphs (1) and (2).
(b)(1)(A)Any design review of the project may be conducted by the local governments planning commission or any equivalent board or commission responsible for design review. That design review shall be objective and be strictly focused on assessing compliance with the criteria required for streamlined projects. That design review shall not in any way inhibit, chill, or preclude the ministerial approval provided by this article.
(B)Any design review for the adjacent portion of the project shall be objective and be strictly focused on assessing compliance with the objective criteria required for streamlined projects, including, as applicable, those for new exterior additions to historic buildings described in Preservation Brief 14: New Exterior Additions to Historic Buildings: Preservation Concerns released by the National Park Service within the United States Department of the Interior.
(2)If the adaptive reuse project is consistent with the requirements of Section 65658.5 and Section 65658.6, if applicable, and is consistent with all objective subdivision standards in the local subdivision ordinance, an application for a subdivision pursuant to the Subdivision Map Act (Division 2 (commencing with Section 66410)) shall be exempt from the requirements of the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code) and shall be subject to the public oversight timelines set forth in paragraph (1).
(c)(1)Notwithstanding any law, a local government, whether or not it has adopted an ordinance governing automobile parking requirements in multifamily developments, shall not impose automobile parking standards for an adjacent portion of the project that was approved pursuant to this article in any of the following instances:
(A)The adjacent portion of the project is located within one-half mile of public transit.
(B)The adjacent portion of the project is located within an architecturally and historically significant historic district.
(C)When on-street parking permits are required but not offered to the occupants of the adjacent portion of the project.
(D)When there is a car share vehicle located within one block of the adjacent portion of the project.
(2)If the adjacent portion of the project does not fall within any of the categories described in paragraph (1), the local government shall not impose automobile parking requirements for the adjacent portion of the project approved pursuant to this article that exceed one parking space per unit.
(d)Notwithstanding any other law, a local government shall not require any of the following prior to approving an adaptive reuse project that meets the requirements of this article:
(1)Studies, information, or other materials that do not pertain directly to determining whether the adaptive reuse project is consistent with the objective planning standards applicable to the development.
(2)(A)Compliance with any standards necessary to receive a postentitlement permit.
(B)This paragraph does not prohibit a local agency from requiring compliance with any standards necessary to receive a postentitlement permit after a permit has been issued pursuant to this section.
(C)For purposes of this paragraph, postentitlement permit has the same meaning as provided in subparagraph (A) of paragraph (3) of subdivision (j) of Section 65913.3.
(e)(1)If a local government approves an adaptive reuse project pursuant to this article, then, notwithstanding any other law, that approval shall not expire if the project satisfies both of the following requirements:
(A)The project includes public investment in housing affordability, beyond tax credits.
(B)At least 20 percent of the units are affordable to households making at or below 80 percent of the area median income.
(2)(A)If a local government approves an adaptive reuse project pursuant to this article, and the project does not satisfy the requirements of subparagraphs (A) and (B) of paragraph (1), that approval shall remain valid for three years from the date of the final action establishing that approval, or if litigation is filed challenging that approval, from the date of the final judgment upholding that approval. Approval shall remain valid for a project provided construction activity, including demolition and grading activity, on the development site has begun pursuant to a permit issued by the local jurisdiction and is in progress. For purposes of this subdivision, in progress means one of the following:
(i)Construction has begun and has not ceased for more than 365 days.
(ii)If the project requires multiple building permits, an initial phase has been completed, and the project proponent has applied for and is diligently pursuing a building permit for a subsequent phase, provided that once it has been issued, the building permit for the subsequent phase does not lapse.
(B)Notwithstanding subparagraph (A), a local government may grant a project a one-time, one-year extension if the project proponent can provide documentation that there has been significant progress toward getting the adaptive reuse project construction ready, such as filing a building permit application.
(3)If the qualified adaptive reuse project proponent requests a modification pursuant to subdivision (f), then the time during which the approval shall remain valid shall be extended for the number of days between the submittal of a modification request and the date of its final approval, plus an additional 180 days to allow time to obtain a building permit. If litigation is filed relating to the modification request, the time shall be further extended during the pendency of the litigation. The extension required by this paragraph shall only apply to the first request for a modification submitted by the development proponent.
(f)(1)(A)A development proponent may request a modification to a qualified adaptive reuse project that has been approved under the streamlined approval process provided in this article if that request is submitted to the local government before the issuance of the final building permit required for construction of the adaptive reuse project.
(B)Except as provided in paragraph (3), the local government shall approve a modification if it determines that the modification is consistent with the objective planning standards specified in subdivision (a) that were in effect when the original adaptive reuse project application was first submitted.
(C)The local government shall evaluate any modifications requested pursuant to this subdivision for consistency with the objective planning standards using the same assumptions and analytical methodology that the local government originally used to assess consistency for the adaptive reuse project that was approved for streamlined, ministerial approval pursuant to subdivision (a).
(2)Upon receipt of the adaptive reuse project proponents application requesting a modification, the local government shall determine if the requested modification is consistent with the objective planning standard and either approve or deny the modification request within 60 days after submission of the modification, or within 90 days if design review is required.
(3)Notwithstanding paragraph (1), the local government may apply objective planning standards to an adjacent portion of the project adopted after the project application was first submitted to the requested modification in any of the following instances:
(A)The adjacent portion of the project is revised such that the total number of residential units or total square footage of construction changes by 15 percent or more. The calculation of the square footage of construction changes shall not include underground space.
(B)The adjacent portion of the project is revised such that the total number of residential units or total square footage of construction changes by 5 percent or more and it is necessary to subject the project to an objective standard beyond those in effect when the project application was submitted in order to mitigate or avoid a specific, adverse impact, as that term is defined in subparagraph (A) of paragraph (1) of subdivision (j) of Section 65589.5, upon the public health or safety and there is no feasible alternative method to satisfactorily mitigate or avoid the adverse impact. The calculation of the square footage of construction changes shall not include underground space.
(C)Objective building standards contained in the California Building Standards Code (Title 24 of the California Code of Regulations) or the California Historical Building Code (Part 8 of Title 24 of the California Code of Regulations), including, but not limited to, building plumbing, electrical, fire, and grading codes, may be applied to all modification applications that are submitted prior to the first building permit application. Those standards may be applied to modification applications submitted after the first building permit application if agreed to by the development proponent.
(4)The local governments review of a modification request pursuant to this subdivision shall be strictly limited to determining whether the modification, including any modification to previously approved density bonus concessions or waivers, renders the project inconsistent with the applicable objective planning standards and shall not reconsider prior determinations that are not affected by the modification.
65658.9.(a)A local government shall issue a subsequent permit required for an adaptive reuse project approved under this article if the application substantially complies with the project as it was approved pursuant to Section 65658.8. Upon receipt of an application for a subsequent permit, the local government shall process the permit without unreasonable delay and shall not impose any procedure or requirement that is not imposed on projects that are not approved pursuant to this article. The local government shall consider the application for subsequent permits based upon the applicable objective standards specified in any state or local laws that were in effect when the original adaptive reuse project application was submitted, unless the proponent agrees to a change in objective standards. Issuance of subsequent permits shall implement the approved project, and review of the permit application shall not inhibit, chill, or preclude the adaptive reuse project. For purposes of this paragraph, a subsequent permit means a permit required subsequent to receiving approval under subdivision (a) of Section 65658.8, and includes, but is not limited to, demolition, grading, encroachment, and building permits and final maps.
(b)(1)If a public improvement is necessary to implement a project subject to this article, including, but not limited to, a bicycle lane, sidewalk or walkway, public transit stop, driveway, street paving or overlay, a curb or gutter, a modified intersection, a street sign or street light, landscape or hardscape, an aboveground or underground utility connection, a water line, fire hydrant, storm or sanitary sewer connection, retaining wall, and any related work, and that public improvement is located on land owned by the local government, to the extent that the public improvement requires approval from the local government, the local government shall not exercise its discretion over any approval relating to the public improvement in a manner that would inhibit, chill, or preclude the project.
(2)If an application for a public improvement described in paragraph (1) is submitted to a local government, the local government shall do all of the following:
(A)Consider the application based upon any objective standards specified in any state or local laws that were in effect when the original adaptive reuse project application was submitted.
(B)Conduct its review and approval in the same manner as it would evaluate the public improvement if required by a project that is not eligible to receive ministerial or streamlined approval pursuant to this section.
(3)If an application for a public improvement described in paragraph (1) is submitted to a local government, the local government shall not do either of the following:
(A)Adopt or impose any requirement that applies to a project solely or partially on the basis that the project is eligible to receive ministerial or streamlined approval pursuant to this article.
(B)Unreasonably delay in its consideration, review, or approval of the application.
(c)Nothing in this article shall be interpreted to limit the applicability of Section 65913.3.
65658.10.(a)A local government shall not adopt or impose any requirement, including, but not limited to, increased fees or inclusionary housing requirements, that applies to a project solely or partially on the basis that the project is eligible to receive ministerial or streamlined approval pursuant to this article.
(b)This article shall not affect a project proponents ability to use any alternative streamlined by right permit processing adopted by a local government.
(c)Any project that qualifies as an adaptive reuse project pursuant to this article shall also qualify as a housing development project entitled to the protections of Section 65589.5.
(d)Alterations to an existing building necessary to comply with local code, the California Building Standards Code (Title 24 of the California Code of Regulations), or the California Historical Building Code (Part 8 of Title 24 of the California Code of Regulations) shall not disqualify a qualified adaptive reuse project from the streamlined, ministerial review process established under this article.
65658.11.An adaptive reuse project approved by a local government pursuant to this part shall meet all of the following labor standards:
(a)The development proponent shall require in contracts with construction contractors, and shall certify to the local government, that the standards specified in this section will be met in project construction.
(b)A development that is not in its entirety a public work for purposes of Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of the Labor Code and approved by a local government pursuant to Sections 65658.8 and 65658.9 shall be subject to all of the following:
(1)All construction workers employed in the execution of the development shall be paid at least the general prevailing rate of per diem wages for the type of work and geographic area, as determined by the Director of Industrial Relations pursuant to Sections 1773 and 1773.9 of the Labor Code, except that apprentices registered in programs approved by the Chief of the Division of Apprenticeship Standards may be paid at least the applicable apprentice prevailing rate.
(2)The development proponent shall ensure that the prevailing wage requirement is included in all contracts for the performance of the work for those portions of the development that are not a public work.
(3)All contractors and subcontractors for those portions of the development that are not a public work shall comply with both of the following:
(A)Pay to all construction workers employed in the execution of the work at least the general prevailing rate of per diem wages, except that apprentices registered in programs approved by the Chief of the Division of Apprenticeship Standards may be paid at least the applicable apprentice prevailing rate.
(B)Maintain and verify payroll records pursuant to Section 1776 of the Labor Code and make those records available for inspection and copying as provided in that section. This subparagraph does not apply if all contractors and subcontractors performing work on the development are subject to a project labor agreement that requires the payment of prevailing wages to all construction workers employed in the execution of the development and provides for enforcement of that obligation through an arbitration procedure.
(c)(1)The obligation of the contractors and subcontractors to pay prevailing wages pursuant to this section may be enforced by any of the following:
(A)The Labor Commissioner through the issuance of a civil wage and penalty assessment pursuant to Section 1741 of the Labor Code, which may be reviewed pursuant to Section 1742 of the Labor Code, within 18 months after the completion of the project.
(B)An underpaid worker through an administrative complaint or civil action.
(C)A joint labor-management committee through a civil action under Section 1771.2 of the Labor Code.
(2)If a civil wage and penalty assessment is issued pursuant to this section, the contractor, subcontractor, and surety on a bond or bonds issued to secure the payment of wages covered by the assessment shall be liable for liquidated damages pursuant to Section 1742.1 of the Labor Code.
(3)This subdivision does not apply if all contractors and subcontractors performing work on the development are subject to a project labor agreement that requires the payment of prevailing wages to all construction workers employed in the execution of the development and provides for enforcement of that obligation through an arbitration procedure.
(d)Notwithstanding subdivision (c) of Section 1773.1 of the Labor Code, the requirement that employer payments not reduce the obligation to pay the hourly straight time or overtime wages found to be prevailing does not apply to those portions of development that are not a public work if otherwise provided in a bona fide collective bargaining agreement covering the worker.
(e)The requirement of this section to pay at least the general prevailing rate of per diem wages does not preclude use of an alternative workweek schedule adopted pursuant to Section 511 or 514 of the Labor Code on developments and portions of developments that are not a public work.
65658.12.In addition to the requirements of Section 65658.11, a development approved by a local government pursuant to this part that includes 40 or more housing units and does not include a building of more than four stories in height shall be subject to all of the following:
(a)The development proponent shall require in contracts with construction contractors and shall certify to the local government that each contractor of any tier who will employ construction craft employees or will let subcontracts for at least 1,000 hours shall satisfy the requirements in subdivisions (b) and (c). A construction contractor is deemed in compliance with subdivisions (b) and (c) if it is signatory to a valid collective bargaining agreement or project labor agreement that requires utilization of registered apprentices and expenditures on health care for employees and dependents.
(b)A contractor with construction craft employees shall either participate in an apprenticeship program approved by the California Division of Apprenticeship Standards pursuant to Section 3075 of the Labor Code, or request the dispatch of apprentices from a state-approved apprenticeship program under the terms and conditions set forth in Section 1777.5 of the Labor Code. A contractor without construction craft employees shall show a contractual obligation that its subcontractors comply with this subdivision.
(c)Each contractor with construction craft employees shall make health care expenditures for each employee in an amount per hour worked on the development equivalent to at least the hourly pro rata cost of a Covered California Platinum level plan for two 40-year-old adults and two dependents 0 to 14 years of age for the Covered California rating area in which the development is located. A contractor without construction craft employees shall show a contractual obligation that its subcontractors comply with this subdivision. Qualifying expenditures shall be credited toward compliance with prevailing wage payment requirements set forth in Section 65912.130.
(d)(1)The development proponent shall provide to the local government, on a monthly basis while its construction contracts on the development are being performed, a report demonstrating compliance with subdivisions (b) and (c). The reports shall be considered public records under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1), and shall be open to public inspection.
(2)A development proponent that fails to provide the monthly report shall be subject to a civil penalty for each month for which the report has not been provided, in the amount of 10 percent of the dollar value of construction work performed by that contractor on the development in the month in question, up to a maximum of ten thousand dollars ($10,000). Any contractor or subcontractor that fails to comply with subdivision (b) or (c) shall be subject to a civil penalty of two hundred dollars ($200) per day for each worker employed in contravention of subdivision (b) or (c).
(3)Penalties may be assessed by the Labor Commissioner within 18 months of completion of the development using the procedures for issuance of civil wage and penalty assessments specified in Section 1741 of the Labor Code, and may be reviewed pursuant to Section 1742 of the Labor Code. Penalties shall be deposited in the State Public Works Enforcement Fund established pursuant to Section 1771.3 of the Labor Code.
(e)Each construction contractor shall maintain and verify payroll records pursuant to Section 1776 of the Labor Code. Each construction contractor shall submit payroll records directly to the Labor Commissioner at least monthly in a format prescribed by the Labor Commissioner in accordance with subparagraph (A) of paragraph (3) of subdivision (a) of Section 1771.4 of the Labor Code. The records shall include a statement of fringe benefits. Upon request by a joint labor-management cooperation committee established pursuant to the Federal Labor Management Cooperation Act of 1978 (29 U.S.C. Sec. 175a), the records shall be provided pursuant to subdivision (e) of Section 1776 of the Labor Code.
(f)All construction contractors shall report any change in apprenticeship program participation or health care expenditures to the local government within 10 business days, and shall reflect those changes on the monthly report. The reports shall be considered public records pursuant to the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1) and shall be open to public inspection.
(g)A joint labor-management cooperation committee established pursuant to the Federal Labor Management Cooperation Act of 1978 (29 U.S.C. Sec. 175a) shall have standing to sue a construction contractor for failure to make health care expenditures pursuant to subdivision (c) in accordance with Section 218.7 or 218.8 of the Labor Code.
65658.13.For any development project for an adaptive reuse project that includes 40 or more housing units and that includes a building of more than four stories in height, in addition to the requirements specified in Section 65658.11, all of the following skilled and trained workforce provisions apply:
(a)Except as specified in subdivision (b), the project applicant shall enter into construction contracts with prime contractors only if all of the following conditions are satisfied:
(1)The contract contains an enforceable commitment that the prime contractor and subcontractors at every tier will use a skilled and trained workforce, as defined in Section 2601 of the Public Contract Code, to perform work on the development project that falls within an apprenticeable occupation in the building and construction trades. However, this enforceable commitment requirement shall not apply to any scopes of work where new bids are accepted pursuant to subdivision (b).
(2)The project applicant or prime contractor shall establish minimum bidding requirements for subcontractors that are objective to the maximum extent possible. The project applicant or prime contractor shall not impose any obstacles in the bid process for subcontractors that go beyond what is reasonable and commercially customary. The project applicant or prime contractor shall accept bids submitted by any bidder that meets the minimum criteria set forth in the bid solicitation.
(3)The prime contractor has provided an affidavit under penalty of perjury that, in compliance with this section, it will use a skilled and trained workforce and will obtain from its subcontractors an enforceable commitment to use a skilled and trained workforce for each scope of work in which it receives at least three bids attesting to satisfaction of the skilled and trained workforce requirements.
(4)When a prime contractor or subcontractor is required to provide an enforceable commitment that a skilled and trained workforce will be used to complete a contract or development project, the commitment shall be made in an enforceable agreement with the developer that provides the following:
(A)The prime contractor and subcontractors at every tier will comply with this section.
(B)The prime contractor will provide the project applicant, on a monthly basis while the project or contract is being performed, a report demonstrating compliance by the prime contractor.
(C)The prime contractor shall provide the project applicant, on a monthly basis while the development project or contract is being performed, the monthly reports demonstrating compliance submitted to the prime contractor by the affected subcontractors.
(b)If a prime contractor fails to receive at least three bids in a scope of construction work from subcontractors that attest to satisfying the skilled and trained workforce requirements as described in this section, the prime contractor may accept new bids for that scope of work. The prime contractor need not require that a skilled and trained workforce be used by the subcontractors for that scope of work.
(c)If the skilled and trained workforce requirements of this section apply, the prime contractor shall require subcontractors to provide, and subcontractors on the development project shall provide, both of the following to the prime contractor:
(1)An affidavit signed under penalty of perjury that a skilled and trained workforce shall be employed on the development project.
(2)Reports on a monthly basis, while the development project or contract is being performed, demonstrating compliance with this section.
(d)Upon issuing any invitation or bid solicitation for the development project, but no less than 14 business days before the bid is due, the project applicant or prime contractor shall send a notice of the invitation or solicitation that describes the development project to the following entities within the jurisdiction of the proposed development project site:
(1)Any bona fide labor organization representing workers in the building and construction trades who may perform work necessary to complete the development project and the local building and construction trades council.
(2)Any organization representing contractors that may perform work necessary to complete the development project, including any contractors association or regional builders exchange.
(e)The project applicant or prime contractor shall, within three business days of a request by a joint labor-management cooperation committee established pursuant to the federal Labor Management Cooperation 8 Act of 1978 (29 U.S.C. Sec. 175a), provide both of the following:
(1)The names and Contractors State License Board numbers of the prime contractor and any subcontractors that submitted a proposal or bid for the development project.
(2)The names and Contractors State License Board numbers of contractors and subcontractors that are under contract to perform construction work.
(f)(1)The project applicant shall provide to the locality, on a monthly basis while the development project or contract is being performed, a report demonstrating that the self-performing prime contractor and all nonexempt subcontractors used a skilled and trained workforce. A monthly report provided to the locality pursuant to this subdivision shall be a public record under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1) and shall be open to public inspection. A project applicant that fails to provide a complete monthly report shall be subject to a civil penalty of 10 percent of the dollar value of construction work performed by that contractor on the development project in the month in question, up to a maximum of ten thousand dollars ($10,000) per month for each month for which the report has not been provided.
(2)Any subcontractor or prime contractor self-performing work subject to the skilled and trained workforce requirements under this section that fails to use a skilled and trained workforce shall be subject to a civil penalty of two hundred dollars ($200) per day for each worker employed in contravention of the skilled and trained workforce requirement. Penalties may be assessed by the Labor Commissioner within 18 months of completion of the development project using the same issuance of civil wage and penalty assessments pursuant to Section 1741 of the Labor Code and may be reviewed pursuant to the same procedures in Section 1742 of the Labor Code. The prime contractor shall not be jointly liable for violations of this paragraph by subcontractors. Penalties shall be paid to the State Public Works Enforcement Fund, the locality, or the labor standards enforcement agency of the locality, depending on the lead entity performing the enforcement work.
(3)Any provision of a contract or agreement of any kind between a project applicant and a prime contractor that purports to delegate, transfer, or assign to a prime contractor any obligations of or penalties incurred by a project applicant shall be deemed contrary to public policy and shall be void and unenforceable.
(g)The requirements of this section shall not apply if all contractors, subcontractors, and craft unions performing work on the development project are subject to a multicraft project labor agreement that requires the use of a skilled and trained workforce. The multicraft project labor agreement shall include all construction crafts with applicable coverage determinations for the specified scopes of work on the development project pursuant to Section 1773 of the Labor Code and shall be executed by all applicable labor organizations regardless of affiliation.
(h)The locality shall have standing to take administrative action against or sue a construction contractor for failure to comply with this section. A prevailing lead agency shall distribute any wages and penalties to workers in accordance with law and retain any fees, additional penalties, or assessments.
65658.14.The locality, and any labor standards enforcement agency that the locality lawfully maintains, may issue a stop notice to halt further work on the development project if work is proceeding in violation of any of the labor standards described in this article.
(a)The locality or its labor standards enforcement agency shall lift the stop notice if the general contractor shows that the labor standards of this article will be followed going forward.
(b)The locality or its labor standards enforcement agency may revoke a building permit if the general contractor does not show that the labor standards of this article will be followed.
65658.15.(a)Notwithstanding any other law, an adaptive reuse project shall be exempt from all impact fees that are not reasonably related to the impacts resulting from the change of use of the site from nonresidential to residential or mixed use. Any fees charged shall be roughly proportional to the difference in impacts caused by the change of use.
(b)This section shall not apply to any adjacent portion of the project.
SEC. 4.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act or because costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
The Legislature finds and declares all of the following:
(a)Converting vacant commercial space into residential housing, through adaptive reuse, could reduce underutilized and vacant buildings that have been decreasing in value, thereby helping to stabilize the commercial real estate market and filling those spaces with more valuable tax-generating uses.
(b)Adaptive reuse projects can increase activity and foot traffic in neighborhoods across the state, which helps support local businesses and enhance the cultural life of cities and towns.
(c)Adaptive reuse projects create new construction jobs and preserve historic structures.
(d)Adaptive reuse projects are more environmentally friendly than new construction by repurposing existing materials, reducing transportation emissions, and preserving embodied carbon.
(e)New housing construction, at all affordability levels, can help to mitigate, and eventually reverse, the statewide housing shortage.
SEC. 2.Chapter 9 (commencing with Section 51299) is added to Part 1 of Division 1 of Title 5 of the Government Code, to read:9.Adaptive Reuse Investment Incentive Program51299.It is the intent of the Legislature in enacting this chapter to provide cities and counties with opportunities to adaptively reuse existing buildings, such as office buildings, in order to facilitate their conversion to housing and mixed uses.
51299.1.For purposes of this chapter:
(a)Adaptive reuse investment incentive funds means, with respect to a qualified adaptive reuse project property for a relevant fiscal year, an amount up to or equal to the amount of ad valorem property tax revenue allocated to the participating local agency, excluding the revenue transfers required by Sections 97.2 and 97.3 of the Revenue and Taxation Code, from the taxation of that portion of the total assessed value of the real and personal property of an adaptive reuse project property that is in excess of the qualified adaptive reuse project propertys valuation at the time of the proponents initial request for funding.
(b)Program means an adaptive reuse investment incentive program established pursuant to Section 51299.2.
(c)(1)Proponent means a party or parties that meet all of the following criteria:
(A)The party is named in the application for a permit to construct a qualified adaptive reuse project submitted to the city or county.
(B)The party will be the fee owner of the qualified adaptive reuse project property upon the completion of that development.
(2)If a proponent that is receiving adaptive reuse investment incentive amounts subsequently leases the qualified adaptive reuse project property to another party, the lease may provide for the payment to that lessee of any portion of adaptive reuse investment incentive funds. A lessee that receives any portion of adaptive reuse investment incentive funds shall also be considered a proponent for the purposes of this chapter.
(d)Qualified adaptive reuse project property means an adaptive reuse project proposed pursuant to Article 11.5 (commencing with Section 65658) of Chapter 3 of Division 1 of Title 7 that is located within the city or county.
51299.2.(a)Commencing in the 202425 fiscal year, the governing body of a city or county, or city and county, may, by ordinance or resolution, establish an adaptive reuse investment incentive program pursuant to this chapter.
(b)(1)A city or county, or city and county, that establishes a program shall, upon the approval by a majority of the entire membership of its governing body of a written request therefor, pay adaptive reuse investment incentive funds to the proponent of a qualified adaptive reuse project property to subsidize the affordable housing units, as required pursuant to Article 11.5 (commencing with Section 65658) of Chapter 3 of Division 1 of Title 7, for up to 30 consecutive fiscal years. Nothing in this paragraph shall prohibit a city or county, or city and county, from paying adaptive reuse investment incentive funds to a proponent pursuant to this paragraph for a period of fewer than 30 years.
(2)A request for the payment of adaptive reuse investment incentive funds shall be filed by a proponent in writing with the governing body of the city or county in the time and manner established by that governing body.
(c)After a city or county, or city and county, approves a request for the payment of adaptive reuse investment incentive funds, payment of adaptive reuse investment incentive funds shall begin with the first fiscal year that commences after the qualified adaptive reuse property is issued a certificate of occupancy.
51299.3.A city or special district may pay to the city or county, or city and county, an amount equal to the amount of ad valorem property tax revenue allocated to that city or special district, but not the actual allocation, derived from the taxation of that portion of the total assessed value of that real property that is in excess of the propertys valuation at the time of the proponents initial request for funding, for the purpose of subsidizing the affordable housing units required pursuant to Article 11.5 (commencing with Section 65658) of Chapter 3 of Division 1 of Title 7.
SEC. 3.Section 65585 of the Government Code is amended to read:65585.(a)In the preparation of its housing element, each city and county shall consider the guidelines adopted by the department pursuant to Section 50459 of the Health and Safety Code. Those guidelines shall be advisory to each city or county in the preparation of its housing element.(b)(1)At least 90 days prior to adoption of a revision of its housing element pursuant to subdivision (e) of Section 65588, or at least 60 days prior to the adoption of a subsequent amendment to this element, the planning agency shall submit a draft element revision or draft amendment to the department. The local government of the planning agency shall make the first draft revision of a housing element available for public comment for at least 30 days and, if any comments are received, the local government shall take at least 10 business days after the 30-day public comment period to consider and incorporate public comments into the draft revision prior to submitting it to the department. For any subsequent draft revision, the local government shall post the draft revision on its internet website and shall email a link to the draft revision to all individuals and organizations that have previously requested notices relating to the local governments housing element at least seven days before submitting the draft revision to the department.(2)The planning agency staff shall collect and compile the public comments regarding the housing element received by the city, county, or city and county and provide these comments to each member of the legislative body before it adopts the housing element.(3)The department shall review the draft and report its written findings to the planning agency within 90 days of its receipt of the first draft submittal for each housing element revision pursuant to subdivision (e) of Section 65588 or within 60 days of its receipt of a subsequent draft amendment or an adopted revision or adopted amendment to an element. The department shall not review the first draft submitted for each housing element revision pursuant to subdivision (e) of Section 65588 until the local government has made the draft available for public comment for at least 30 days and, if comments were received, has taken at least 10 business days to consider and incorporate public comments pursuant to paragraph (1).(c)In the preparation of its findings, the department may consult with any public agency, group, or person. The department shall receive and consider any written comments from any public agency, group, or person regarding the draft or adopted element or amendment under review.(d)In its written findings, the department shall determine whether the draft element or draft amendment substantially complies with this article.(e)Prior to the adoption of its draft element or draft amendment, the legislative body shall consider the findings made by the department. If the departments findings are not available within the time limits set by this section, the legislative body may act without them.(f)If the department finds that the draft element or draft amendment does not substantially comply with this article, the legislative body shall take one of the following actions:(1)Change the draft element or draft amendment to substantially comply with this article.(2)Adopt the draft element or draft amendment without changes. The legislative body shall include in its resolution of adoption written findings that explain the reasons the legislative body believes that the draft element or draft amendment substantially complies with this article despite the findings of the department.(g)Promptly following the adoption of its element or amendment, the planning agency shall submit a copy to the department.(h)The department shall, within 60 days, review adopted housing elements or amendments and report its findings to the planning agency.(i)(1)(A)The department shall review any action or failure to act by the city, county, or city and county that it determines is inconsistent with an adopted housing element or Section 65583, including any failure to implement any program actions included in the housing element pursuant to Section 65583. The department shall issue written findings to the city, county, or city and county as to whether the action or failure to act substantially complies with this article, and provide a reasonable time no longer than 30 days for the city, county, or city and county to respond to the findings before taking any other action authorized by this section, including the action authorized by subparagraph (B).(B)If the department finds that the action or failure to act by the city, county, or city and county does not substantially comply with this article, and if it has issued findings pursuant to this section that an amendment to the housing element substantially complies with this article, the department may revoke its findings until it determines that the city, county, or city and county has come into compliance with this article.(2)The department may consult with any local government, public agency, group, or person, and shall receive and consider any written comments from any public agency, group, or person, regarding the action or failure to act by the city, county, or city and county described in paragraph (1), in determining whether the housing element substantially complies with this article.(j)The department shall notify the city, county, or city and county and may notify the office of the Attorney General that the city, county, or city and county is in violation of state law if the department finds that the housing element or an amendment to this element, or any action or failure to act described in subdivision (i), does not substantially comply with this article or that any local government has taken an action in violation of the following:(1)Housing Accountability Act (Section 65589.5).(2)Section 65863.(3)Chapter 4.3 (commencing with Section 65915).(4)Section 65008.(5)Housing Crisis Act of 2019 (Chapter 654, Statutes of 2019, Sections 65941.1, 65943, and 66300).(6)Section 8899.50.(7)Section 65913.4.(8)Article 11 (commencing with Section 65650).(9)Article 12 (commencing with Section 65660).(10)Section 65913.11.(11)Section 65400.(12)Section 65863.2.(13)Chapter 4.1 (commencing with Section 65912.100).(14)Section 65905.5.(15)Chapter 13 (commencing with Section 66310).(16)Section 65852.21.(17)Section 65852.24.(18)Section 66411.7.(19)Section 65913.16.(20)Article 2 (commencing with Section 66300.5) of Chapter 12.(21)Section 65852.28.(22)Section 65913.4.5.(23)Section 66499.41.(24)Article 11.5 (commencing with Section 65658).(k)Commencing July 1, 2019, prior to the Attorney General bringing any suit for a violation of the provisions identified in subdivision (j) related to housing element compliance and seeking remedies available pursuant to this subdivision, the department shall offer the jurisdiction the opportunity for two meetings in person or via telephone to discuss the violation, and shall provide the jurisdiction written findings regarding the violation. This paragraph does not affect any action filed prior to the effective date of this section. The requirements set forth in this subdivision do not apply to any suits brought for a violation or violations of paragraphs (1) and (3) to (9), inclusive, of subdivision (j).(l)In any action or special proceeding brought by the Attorney General relating to housing element compliance pursuant to a notice or referral under subdivision (j), the Attorney General may request, upon a finding of the court that the housing element does not substantially comply with the requirements of this article pursuant to this section, that the court issue an order or judgment directing the jurisdiction to bring its housing element into substantial compliance with the requirements of this article. The court shall retain jurisdiction to ensure that its order or judgment is carried out. If a court determines that the housing element of the jurisdiction substantially complies with this article, it shall have the same force and effect, for purposes of eligibility for any financial assistance that requires a housing element in substantial compliance and for purposes of any incentives provided under Section 65589.9, as a determination by the department that the housing element substantially complies with this article.(1)If the jurisdiction has not complied with the order or judgment after 12 months, the court shall conduct a status conference. Following the status conference, upon a determination that the jurisdiction failed to comply with the order or judgment compelling substantial compliance with the requirements of this article, the court shall impose fines on the jurisdiction, which shall be deposited into the Building Homes and Jobs Trust Fund. Any fine levied pursuant to this paragraph shall be in a minimum amount of ten thousand dollars ($10,000) per month, but shall not exceed one hundred thousand dollars ($100,000) per month, except as provided in paragraphs (2) and (3). In the event that the jurisdiction fails to pay fines imposed by the court in full and on time, the court may require the Controller to intercept any available state and local funds and direct such funds to the Building Homes and Jobs Trust Fund to correct the jurisdictions failure to pay. The intercept of the funds by the Controller for this purpose shall not violate any provision of the California Constitution.(2)If the jurisdiction has not complied with the order or judgment after three months following the imposition of fees described in paragraph (1), the court shall conduct a status conference. Following the status conference, if the court finds that the fees imposed pursuant to paragraph (1) are insufficient to bring the jurisdiction into compliance with the order or judgment, the court may multiply the fine determined pursuant to paragraph (1) by a factor of three. In the event that the jurisdiction fails to pay fines imposed by the court in full and on time, the court may require the Controller to intercept any available state and local funds and direct such funds to the Building Homes and Jobs Trust Fund to correct the jurisdictions failure to pay. The intercept of the funds by the Controller for this purpose shall not violate any provision of the California Constitution.(3)If the jurisdiction has not complied with the order or judgment six months following the imposition of fees described in paragraph (1), the court shall conduct a status conference. Upon a determination that the jurisdiction failed to comply with the order or judgment, the court may impose the following:(A)If the court finds that the fees imposed pursuant to paragraphs (1) and (2) are insufficient to bring the jurisdiction into compliance with the order or judgment, the court may multiply the fine determined pursuant to paragraph (1) by a factor of six. In the event that the jurisdiction fails to pay fines imposed by the court in full and on time, the court may require the Controller to intercept any available state and local funds and direct such funds to the Building Homes and Jobs Trust Fund to correct the jurisdictions failure to pay. The intercept of the funds by the Controller for this purpose shall not violate any provision of the California Constitution.(B)The court may order remedies available pursuant to Section 564 of the Code of Civil Procedure, under which the agent of the court may take all governmental actions necessary to bring the jurisdictions housing element into substantial compliance pursuant to this article in order to remedy identified deficiencies. The court shall determine whether the housing element of the jurisdiction substantially complies with this article and, once the court makes that determination, it shall have the same force and effect, for all purposes, as the departments determination that the housing element substantially complies with this article. An agent appointed pursuant to this paragraph shall have expertise in planning in California.(4)This subdivision does not limit a courts discretion to apply any and all remedies in an action or special proceeding for a violation of any law identified in subdivision (j).(m)In determining the application of the remedies available under subdivision (l), the court shall consider whether there are any mitigating circumstances delaying the jurisdiction from coming into compliance with state housing law. The court may consider whether a city, county, or city and county is making a good faith effort to come into substantial compliance or is facing substantial undue hardships.(n)Nothing in this section shall limit the authority of the office of the Attorney General to bring a suit to enforce state law in an independent capacity. The office of the Attorney General may seek all remedies available under law including those set forth in this section.(o)Notwithstanding Sections 11040 and 11042, if the Attorney General declines to represent the department in any action or special proceeding brought pursuant to a notice or referral under subdivision (j), the department may appoint or contract with other counsel for purposes of representing the department in the action or special proceeding.(p)Notwithstanding any other provision of law, the statute of limitations set forth in subdivision (a) of Section 338 of the Code of Civil Procedure shall apply to any action or special proceeding brought by the office of the Attorney General or pursuant to a notice or referral under subdivision (j), or by the department pursuant to subdivision (o).SEC. 4.SEC. 3.Article 11.5 (commencing with Section 65658) is added to Chapter 3 of Division 1 of Title 7 of the Government Code, to read:11.5.Office to Housing Conversion Act65658.This article may be cited as the Office to Housing Conversion Act.
65658.1.For purposes of this article:
(a)(1)Adaptive reuse project means the retrofitting and repurposing of an existing building to create new residential or mixed uses including office conversion projects.
(2)(A)Adaptive reuse project shall not include the any of the following:
(A)The retrofitting and repurposing of any industrial use, unless the planning director or equivalent position finds, based on substantial evidence in the record, that the building is no longer economically viable for industrial use or uses.
(B) uses. A finding described in this subparagraph (A) that a building for industrial use is no longer economically viable shall not be considered a project under the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code).
(B)The retrofitting and repurposing of any hotels, or any mixed-use buildings that contain hotel use, except if they have been discontinued for a minimum of five years from the date on which this article becomes operative.
(b)Adjacent portion of the project means the portion of the project located on a site adjacent to and attached to the proposed repurposed existing building, including on the same parcel as the proposed repurposed existing building.
(c)Broadly applicable housing affordability requirement means a local ordinance or other regulation that requires a minimum percentage of affordable units and that applies to a variety of housing development types or entitlement pathways.
(d)Impact fee means any fee imposed pursuant to Chapter 5 (commencing with Section 66000).
(e)Industrial use means utilities, manufacturing, transportation storage and maintenance facilities, warehousing uses, and any other use that is a source that is subject to permitting by a district, as defined in Section 39025 of the Health and Safety Code, pursuant to Division 26 (commencing with Section 39000) of the Health and Safety Code or the federal Clean Air Act (42 U.S.C. Sec. 7401 et seq.). Industrial use does not include any of the following:
(1)Power substations or utility conveyances such as power lines, broadband wires, and pipes.
(2)A use where the only source permitted by a district is an emergency backup generator.
(3)Self-storage for the residents of a building.
(e)(f)Historical resource means the same as defined in subdivision (j) of Section 5020.1 of the Public Resources Code, or a resource listed in the California Register of Historical Resources as described in Section 5024.1 of the Public Resources Code.
(f)(g)Local affordable housing requirement means either of the following:
(1)A local government requirement that a housing development project include a certain percentage of units affordable to, and occupied by, extremely low, very low, lower, or moderate-income households as a condition of development of residential units.
(2)A local government requirement allowing a housing development project to be a use by right if the project includes a certain percentage of units affordable to, and occupied by, extremely low, very low, lower, or moderate-income households as a condition of development of residential units.
(g)(h)Local government means a city, including a charter city, a county, including a charter county, or a city and county. county, including a charter city and county.
(h)(i)Mixed use means residential uses combined with at least one other land use, but not including any industrial use.
(i)(j)Office conversion project means the conversion of a building used for office purposes or a vacant office building into residential dwelling units.
(j)(k)Persons and families of low or moderate income means the same as defined in Section 50093 of the Health and Safety Code.
(k)(l)Phase I environmental assessment means the same as defined in Section 78090 of the Health and Safety Code.
(l)(m)Phase II environmental assessment means the same as defined in Section 25403 of the Health and Safety Code.
(m)(n)Preliminary endangerment assessment means the same as defined in Section 78095 of the Health and Safety Code.
(o)Project labor agreement has the same meaning as set forth in paragraph (1) of subdivision (b) of Section 2500 of the Public Contract Code.
(n)(p)Residential uses includes, but is not limited to, housing units, dormitories, boarding houses, group housing, and other congregate residential uses. Residential uses does not include prisons or jails.
(o)(q)Urban uses has the same meaning as defined in Section 65912.101.
(p)(r)Use by right means that the citys or countys review of the adaptive reuse project may not require a conditional use permit, planned unit development permit, or other discretionary city or county review or approval that would constitute a project for purposes of Division 13 (commencing with Section 21000) of the Public Resources Code. Any subdivision of the sites shall be subject to all laws, including, but not limited to, a city or county ordinance implementing the Subdivision Map Act (Division 2 (commencing with Section 66410)).
65658.3.(a)A local government may adopt an ordinance to implement this article and specify the process and requirements applicable to adaptive reuse projects, provided that the ordinance is consistent with, and does not inhibit the objectives of, this article.
(b)An ordinance adopted pursuant to subdivision (a) shall not be considered a project under the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code).
(c)A local agency that has not adopted an ordinance governing adaptive reuse pursuant to subdivision (a) shall ministerially without discretionary review approve or disapprove applications the local agency receives for a permit to create or serve an adaptive reuse project pursuant to this article.
(d)Notwithstanding Section 65455, any zoning ordinance authorizing adaptive reuse projects may be adopted or amended even if it is inconsistent with the adopted specific plan, and any conflicting provisions authorizing adaptive reuse projects in the zoning ordinance shall supersede the conflicted provisions in the specific plan.
(e)Nothing in this article is intended to preempt the adoption and implementation of a local ordinance that provides alternative procedures and substantive requirements for adaptive reuse projects, provided that the local ordinance does not prohibit an applicant from electing to pursue an adaptive reuse project under this article or under any ordinance adopted to implement this article.
65658.4.The Legislature finds and declares that this article addresses a matter of statewide concern rather than a municipal affair as that term is used in Section 5 of Article XI of the California Constitution. Therefore, this article applies to all cities, including charter cities.
65658.5.(a)An adaptive reuse project that meets the requirements of subdivision (b) shall be deemed a use by right in all zones, regardless of the zoning of the site, and subject to the streamlined, ministerial review process described in Section 65658.8, except that any both of the following conditions apply:
(1)Any nonresidential uses of a proposed mixed-use adaptive reuse project shall be consistent with the land uses allowed by the zoning or a continuation of an existing zoning nonconforming use.
(2)Any tourist hotel uses of a proposed adaptive reuse project shall be subject to the existing approval processes required by that local jurisdiction.
(b)An adaptive reuse project shall comply with all of the following requirements:
(1)The adaptive reuse project and the site on which it is located shall satisfy both of the following:
(A)It is a legal parcel or parcels located in a city if, and only if, the city boundaries include some portion of either an urbanized area or urban cluster, area, as designated by the United States Census Bureau, or, for unincorporated areas, a legal parcel or parcels wholly within the boundaries of an urbanized area or urban cluster, area, as designated by the United States Census Bureau.
(B)At least 75 percent of the perimeter of the site adjoins parcels that are developed with urban uses. For the purposes of this section, parcels that are separated by a street, highway, or any other right of way right-of-way shall be considered to be adjoined.
(2)The adaptive reuse project is proposed for any of the following, as applicable:
(A)The project is proposed for an existing building that is less than 50 years old.
(B)The project is proposed for an existing building that is listed on a local, state, or federal register of historic resources and the adaptive reuse project proponent complies with Section 65658.7.
(C)The project is proposed for an existing building that is more than 50 years old and the local government has evaluated the site through a preliminary application submitted pursuant to subdivision (a) of Section 65658.7 and either of the following are satisfied:
(i)The local government determines that the building or site is a historic resource and the adaptive reuse project proponent complies with Section 65658.7.
(ii)The local government determines that the building or site is not a historic resource.
(3)The adaptive reuse project meets the following affordability criteria, as applicable:
(A)(i)An adaptive reuse project for rental housing shall include either of the following:
(I)Eight percent of the units for very low income households and 5 percent of the units for extremely low income households.
(II)Fifteen percent of the units for lower income households.
(ii)The development proponent shall agree to, and the local government shall require, the continued affordability of all affordable rental units included pursuant to this subdivision through a recorded affordability restriction for a period of 55 years. Rents shall be set at an affordable rent, as defined in Section 50053 of the Health and Safety Code.
(B)(i)An adaptive reuse project for owner-occupied housing shall comply with either of the following:
(I)Thirty percent of the units shall be offered at an affordable housing cost, as defined in Section 50052.5 of the Health and Safety Code, to moderate-income households.
(II)Fifteen percent of the units shall be offered at an affordable housing cost, as defined in Section 50052.5 of the Health and Safety Code, to lower income households.
(ii)The development proponent shall agree to, and the local government shall require, the continued affordability of all affordable ownership units through a recorded affordability restriction for a period of 45 years.
(C)If the local government has a local affordable housing requirement, the housing development project shall comply with all of the following:
(i)The development project shall include the percentage of affordable units required by this section or the local requirement, whichever is higher.
(ii)The development project shall meet the lowest income targeting required by either this section or the local requirement.
(iii)If the local affordable housing requirement requires greater than 15 percent of the units to be dedicated for lower income households and does not require the inclusion of units affordable to very low and extremely low income households, then the rental housing development shall do both of the following:
(I)Include 8 percent of the units for very low income households and 5 percent of the units for extremely low income households.
(II)Fifteen percent of units affordable to lower income households shall be subtracted from the percentage of units required by the local policy at the highest required affordability level.
(D)Affordable units in the development project shall have the same bedroom and bathroom count ratio as the market rate units, be equitably distributed within the project, and have the same type or quality of appliances, fixtures, and finishes.
(4)If the adaptive reuse project includes mixed uses, at least one-half of the square footage of the adaptive reuse project shall be dedicated to residential uses. For purposes of this subparagraph, square footage of the project does not include underground space, including basements or underground parking garages.
(5)(A)The local government shall, as a condition of approval of the development, require the development proponent to complete a Phase I environmental assessment.
(B)If a recognized environmental condition is found, the development proponent shall undertake a preliminary endangerment assessment, as defined in Section 78095 of the Health and Safety Code, prepared by an environmental assessor to determine the existence of any release of a hazardous substance on the site and to determine the potential for exposure of future occupants to significant health hazards from any nearby property or activity.
(i)If a release of a hazardous substance is found to exist on the site, before the local government issues a certificate of occupancy, the release shall be removed, or any significant effects of the release shall be mitigated to a level of insignificance in compliance with current state and federal requirements.
(ii)If a potential for exposure to significant hazards from surrounding properties or activities is found to exist, before the local government issues a certificate of occupancy, the effects of the potential exposure shall be mitigated to a level of insignificance in compliance with current state and federal requirements.
(6)(A)The adaptive reuse project complies with all objective planning standards found in an ordinance adopted pursuant to Section 65658.3.
(B)A local government shall not impose any local development standard on any project that is an adaptive reuse project pursuant to this article that would require alteration of the existing building envelope, except if required by any applicable local building code, regardless of whether the local government has adopted an ordinance pursuant to Section 65658.3.
(7)The acreage of the project site is 20 acres or less.
(c)An adaptive reuse project that meets all the requirements of subdivision (b) may include rooftop structures that exceed any applicable height limitation imposed by the local government, provided that the rooftop structure does not exceed one story and is used for shared amenities or equipment, including, but not limited to, shared cooking facilities, exercise facilities, common area lounges, or mechanical and stair penthouse facilities.
(d)(1)Parking shall not be required for the portion of a project consisting of a building subject to adaptive reuse that does not have existing onsite parking.
(2)This article shall not reduce, eliminate, or preclude the enforcement of any requirement imposed on a new multifamily residential or nonresidential development to provide bicycle parking, if feasible.
(3)This article shall not reduce, eliminate, or preclude the enforcement of any requirement imposed on a project that includes existing onsite parking to provide electric vehicle supply equipment installed parking spaces or parking spaces that are accessible to persons with disabilities that would have otherwise applied to the development if this section did not apply.
(e)An adaptive reuse project shall not violate the terms of any conservation easement applicable to the site.
(f)(1)A housing development proposed pursuant to this article shall be eligible for a density bonus, incentives or concessions, waivers or reductions of development standards, and parking ratios pursuant to Section 65915.
(2)For the purpose of calculating a density bonus for a project proposed pursuant to this article, the base density of an adaptive reuse project shall be the density proposed by the developer, including the portion of a project consisting of a building with a proposed change in use and any adjacent portion of the project, notwithstanding any general plan density limit as described in paragraph (6) of subdivision (o) of Section 65915.
(3)The affordability criteria described in paragraph (3) of subdivision (b) shall apply to the base density of the project, and shall not apply to any bonus units proposed pursuant to Section 65915.
(g)A housing development proposed to adaptively reuse a building shall not be eligible for a density bonus waiver or incentive that has the effect of increasing the height of the adaptively reused building above what is allowed under subdivision (c).
65658.6.(a)An adaptive reuse project that satisfies the requirements of Section 65658.5 may include the development of new residential or mixed-use structures on undeveloped areas and parking areas located on the same parcel as the proposed repurposed building, or on the parcels adjacent to the proposed adaptive reuse project site if all of the following requirements are met:
(1)The adjacent portion of the project complies with the requirements of any of the following:
(A)The requirements of paragraph paragraphs (5) and (8) of subdivision (a) of Section 65913.4.
(B)The requirements of the Affordable Housing and High Road Jobs Act of 2022 (Chapter 4.1 (commencing with Section 65912.100)). 65912.100)), including the labor standards for construction workers in the act.
(C)The requirements of the Middle Class Housing Act of 2022 (Section 65852.24). 65852.24), including the labor standards for construction workers in the act.
(2)The adjacent portion of the project is located on a parcel that satisfies the requirements specified in subparagraphs (A) and (B) of paragraph (2) of subdivision (a) of Section 65913.4.
(3)The adjacent portion of the project is located on a parcel that satisfies the requirements specified in paragraph (6) of subdivision (a) of Section 65913.4, exclusive of clause (iv) of subparagraph (A) (A), and subparagraph (K), of that paragraph.
(4)The adjacent portion of the project is located on a parcel that satisfies the requirements specified in paragraph (7) of subdivision (a) of Section 65913.4.
(5)The applicant and local agency comply with the requirements of subdivision (b) of Section 65913.4.
(6)Any existing open space on the proposed project site is not a historic resource.
(b)The adjacent portion of the project shall be eligible for a density bonus, incentives or concessions, waivers or reductions of development standards, and parking ratios pursuant to Section 65915.
(c)For purposes of this section, adjacent portion of the project means the portion of the project located on a site adjacent to the proposed repurposed existing building.
65658.7.(a)(1)Before submitting an application for an adaptive reuse project pursuant to Section 65658.5 for a structure that is more than 50 years old and not listed on a local, state, or federal register of historic resources, the development proponent shall submit to the local government a notice of its intent to submit an application. The notice of intent shall be in the form of a preliminary application that includes all of the information described in Section 65941.1.
(2)Upon receipt of a notice of intent to submit an application described in subdivision (a), the local government shall evaluate the project site for historical resources. The local government shall make a historic resource significance determination within 90 days of submission of the notice of intent for purposes of paragraph (1) of subdivision (b) of Section 65658.5.
(3)Submission of a notice of intent pursuant to this section does not constitute owner consent for determination of eligibility for the California or national registers of historic places. Any determination of historic resource significance made pursuant to this subdivision shall apply only for the purposes of this article and shall not affect or be applicable to any other law.
(b)If the adaptive reuse project is proposed for an existing building that is listed on a local, state, or federal register of historic resources or if the local government has determined that the project site is a significant historic resource pursuant to subdivision (a), the adaptive reuse project proponent shall sign an affidavit declaring that the project will only move forward if it complies with either of the following:
(1)The United States Secretary of the Interiors Standards for Rehabilitation, as found in Part 67 of Title 36 of the Code of Federal Regulations, for the preservation of exterior facades of a building that face a street, interior facades of a building that face a courtyard, and interior spaces of a building that are publicly accessible and character defining, including ground floor lobbies. Exterior facades that do not face a street, interior facades that do not face a courtyard, and interior spaces that are not publicly accessible and character defining may be modified without regard to the United States Secretary of the Interiors Standards for Rehabilitation.
(2)The project is awarded federal historic rehabilitation tax credits pursuant to Section 47 of the Internal Revenue Code, or state historic rehabilitation tax credits pursuant to Section 17053.91 or 23691 of the Revenue and Taxation Code.
(c)(1)(A)Notwithstanding subdivision (b), if the adaptive reuse project is proposed for a site that is listed on a local, state, or federal historic register and the adaptive reuse project proponent does not sign an affidavit pursuant to subdivision (b), the local government shall process the adaptive reuse project pursuant to Section 65658.8, but the local government may deny or conditionally approve the project if the local government makes a finding, based upon a preponderance of evidence in the record, that the project will cause a significant adverse impact to historic resources.
(B)A local agency may impose conditions of approval to mitigate impacts to historic resources and to comply with the United States Secretary of the Interiors Standards for Rehabilitation, as found in Part 67 of Title 36 of the Code of Federal Regulations, for the preservation of exterior facades of a building that face a street and interior spaces of a building that are publicly accessible and character defining, including ground floor lobbies, but shall not impose other conditions of approval. Exterior facades that do not face a street and interior spaces that are not publicly accessible and character defining shall not be required to be preserved according to the United States Secretary of the Interiors Standards for Rehabilitation.
(2)An adaptive reuse project pursuant to this section shall not constitute a project for purposes of Division 13 (commencing with Section 21000) of the Public Resources Code.
(d)For the purposes of this article, a local governments evaluation of a site for historical resources and review of an adaptive reuse project for consistency with the United States Secretary of the Interiors Standards for Rehabilitation shall be conducted by a person who meets the United States Secretary of the Interiors Professional Qualifications Standards, as published in Part 67 (commencing with Section 67.1) of Title 36 of the Code of Federal Regulations. Any revised professional qualifications standards adopted by the Secretary of the Interior that supersede the standards described in this paragraph shall apply.
65658.8.(a)(1)Notwithstanding any local law, if a local governments planning director or equivalent position determines that an adaptive reuse project submitted pursuant to this article is consistent with the objective planning standards specified in Section 65658.5 and Section 65658.6, if applicable, the local government shall approve the adaptive reuse project. Upon project within the following timeframes:
(A)Within 60 days of the date that the project has been deemed consistent pursuant to this paragraph and paragraph (2), if the project contains 150 or fewer housing units.
(B)Within 90 days of the date that the project has been deemed consistent pursuant to this paragraph and paragraph (2), if the project contains more than 150 housing units.
(2)Upon a determination that an adaptive reuse project submitted pursuant to this section is in conflict with any of the objective planning standards specified in Section 65658.5 or Section 65658.6, if applicable, the local government staff or relevant local planning and permitting department that made the determination shall provide the development proponent written documentation of which standard or standards the development conflicts with, and an explanation for the reason or reasons the development conflicts with that standard or standards, as follows: standards within the following timeframes:
(A)Within 60 days of submittal of the adaptive reuse project to the local government pursuant to this section if the project contains 150 or fewer housing units.
(B)Within 90 days of submittal of the adaptive reuse project to the local government pursuant to this section if the project contains more than 150 housing units.
(C)Within 30 days of submittal of any adaptive reuse project that was resubmitted to the local government following a determination of a conflict with one or more objective planning standards pursuant to this paragraph.
(2)(3)If the local governments planning director or equivalent position fails to provide the required documentation pursuant to paragraph (1), (2), the adaptive reuse project shall be deemed to satisfy the objective planning standards specified in Section 65658.5 and Section 65658.6, if applicable.
(3)(4)For purposes of this section, an adaptive reuse project is consistent with the objective planning standards specified in Section 65658.5 and Section 65658.6, if applicable, if there is substantial evidence that would allow a reasonable person to conclude that the project is consistent with the objective planning standards. The local government shall not determine that an adaptive reuse project, including an application for a modification under subdivision (f), is in conflict with the objective planning standards on the basis that application materials are not included, if the application contains substantial evidence that would allow a reasonable person to conclude that the project is consistent with the objective planning standards.
(4)(5)Upon submittal of an application for streamlined, ministerial approval pursuant to this section to the local government, all departments of the local government that are required to issue an approval of the adaptive reuse project before the granting of an entitlement shall comply with the requirements of this section within the time periods specified in paragraph (1). paragraphs (1) and (2).
(b)(1)(A)Any design review of the adjacent portion of the project may be conducted by the local governments planning commission or any equivalent board or commission responsible for design review. That design review shall be objective and be strictly focused on assessing compliance with the criteria required for streamlined projects. That design review shall be completed, and if the project is consistent with all applicable objective standards, the local government shall approve the project as follows and shall not in any way inhibit, chill, or preclude the ministerial approval provided by this article or its effect, as applicable: article.
(A)Within 90 days of submittal of the qualified adaptive reuse project to the local government pursuant to this section if the project contains 150 or fewer housing units.(B)Within 180 days of submittal of the qualified adaptive reuse project to the local government pursuant to this section if the project contains more than 150 housing units.(B)Any design review for the adjacent portion of the project shall be objective and be strictly focused on assessing compliance with the objective criteria required for streamlined projects, including, as applicable, those for new exterior additions to historic buildings described in Preservation Brief 14: New Exterior Additions to Historic Buildings: Preservation Concerns released by the National Park Service within the United States Department of the Interior.
(2)If the adaptive reuse project is consistent with the requirements of Section 65658.5 and Section 65658.6, if applicable, and is consistent with all objective subdivision standards in the local subdivision ordinance, an application for a subdivision pursuant to the Subdivision Map Act (Division 2 (commencing with Section 66410)) shall be exempt from the requirements of the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code) and shall be subject to the public oversight timelines set forth in paragraph (1).
(3)If a local government determines that an adaptive reuse project submitted pursuant to this article is in conflict with any of the standards imposed pursuant to paragraph (1), it shall provide the project proponent written documentation of which objective standard or standards the adaptive reuse project conflicts with, and an explanation for the reason or reasons the project conflicts with, that objective standard or standards consistent with the timelines described in paragraph (1) of subdivision (a).(c)(1)Notwithstanding any law, a local government, whether or not it has adopted an ordinance governing automobile parking requirements in multifamily developments, shall not impose automobile parking standards for an adjacent portion of the project that was approved pursuant to this article in any of the following instances:
(A)The adjacent portion of the project is located within one-half mile of public transit.
(B)The adjacent portion of the project is located within an architecturally and historically significant historic district.
(C)When on-street parking permits are required but not offered to the occupants of the adjacent portion of the project.
(D)When there is a car share vehicle located within one block of the adjacent portion of the project.
(2)If the adjacent portion of the project does not fall within any of the categories described in paragraph (1), the local government shall not impose automobile parking requirements for the adjacent portion of the project approved pursuant to this article that exceed one parking space per unit.
(d)Notwithstanding any other law, a local government shall not require any of the following prior to approving an adaptive reuse project that meets the requirements of this article:
(1)Studies, information, or other materials that do not pertain directly to determining whether the adaptive reuse project is consistent with the objective planning standards applicable to the development.
(2)(A)Compliance with any standards necessary to receive a postentitlement permit.
(B)This paragraph does not prohibit a local agency from requiring compliance with any standards necessary to receive a postentitlement permit after a permit has been issued pursuant to this section.
(C)For purposes of this paragraph, postentitlement permit has the same meaning as provided in subparagraph (A) of paragraph (3) of subdivision (j) of Section 65913.3.
(e)(1)If a local government approves an adaptive reuse project pursuant to this article, then, notwithstanding any other law, that approval shall not expire if the project satisfies both of the following requirements:
(A)The project includes public investment in housing affordability, beyond tax credits.
(B)At least 20 percent of the units are affordable to households making at or below 80 percent of the area median income.
(2)(A)If a local government approves an adaptive reuse project pursuant to this article, and the project does not satisfy the requirements of subparagraphs (A) and (B) of paragraph (1), that approval shall remain valid for three years from the date of the final action establishing that approval, or if litigation is filed challenging that approval, from the date of the final judgment upholding that approval. Approval shall remain valid for a project provided construction activity, including demolition and grading activity, on the development site has begun pursuant to a permit issued by the local jurisdiction and is in progress. For purposes of this subdivision, in progress means one of the following:
(i)Construction has begun and has not ceased for more than 365 days.
(ii)If the project requires multiple building permits, an initial phase has been completed, and the project proponent has applied for and is diligently pursuing a building permit for a subsequent phase, provided that once it has been issued, the building permit for the subsequent phase does not lapse.
(B)Notwithstanding subparagraph (A), a local government may grant a project a one-time, one-year extension if the project proponent can provide documentation that there has been significant progress toward getting the adaptive reuse project construction ready, such as filing a building permit application.
(3)If the qualified adaptive reuse project proponent requests a modification pursuant to subdivision (f), then the time during which the approval shall remain valid shall be extended for the number of days between the submittal of a modification request and the date of its final approval, plus an additional 180 days to allow time to obtain a building permit. If litigation is filed relating to the modification request, the time shall be further extended during the pendency of the litigation. The extension required by this paragraph shall only apply to the first request for a modification submitted by the development proponent.
(f)(1)(A)A development proponent may request a modification to a qualified adaptive reuse project that has been approved under the streamlined approval process provided in this article if that request is submitted to the local government before the issuance of the final building permit required for construction of the adaptive reuse project.
(B)Except as provided in paragraph (3), the local government shall approve a modification if it determines that the modification is consistent with the objective planning standards specified in subdivision (a) that were in effect when the original adaptive reuse project application was first submitted.
(C)The local government shall evaluate any modifications requested pursuant to this subdivision for consistency with the objective planning standards using the same assumptions and analytical methodology that the local government originally used to assess consistency for the adaptive reuse project that was approved for streamlined, ministerial approval pursuant to subdivision (a).
(2)Upon receipt of the adaptive reuse project proponents application requesting a modification, the local government shall determine if the requested modification is consistent with the objective planning standard and either approve or deny the modification request within 60 days after submission of the modification, or within 90 days if design review is required.
(3)Notwithstanding paragraph (1), the local government may apply objective planning standards to an adjacent portion of the project adopted after the project application was first submitted to the requested modification in any of the following instances:
(A)The adjacent portion of the project is revised such that the total number of residential units or total square footage of construction changes by 15 percent or more. The calculation of the square footage of construction changes shall not include underground space.
(B)The adjacent portion of the project is revised such that the total number of residential units or total square footage of construction changes by 5 percent or more and it is necessary to subject the project to an objective standard beyond those in effect when the project application was submitted in order to mitigate or avoid a specific, adverse impact, as that term is defined in subparagraph (A) of paragraph (1) of subdivision (j) of Section 65589.5, upon the public health or safety and there is no feasible alternative method to satisfactorily mitigate or avoid the adverse impact. The calculation of the square footage of construction changes shall not include underground space.
(C)Objective building standards contained in the California Building Standards Code (Title 24 of the California Code of Regulations), the International Existing Building Code of the International Code Council, Regulations) or the California Historical Building Code (Part 8 of Title 24 of the California Code of Regulations) Regulations), including, but not limited to, building plumbing, electrical, fire, and grading codes, may be applied to all modification applications that are submitted prior to the first building permit application. Those standards may be applied to modification applications submitted after the first building permit application if agreed to by the development proponent.
(4)The local governments review of a modification request pursuant to this subdivision shall be strictly limited to determining whether the modification, including any modification to previously approved density bonus concessions or waivers, renders the project inconsistent with the applicable objective planning standards and shall not reconsider prior determinations that are not affected by the modification.
65658.9.(a)A local government shall issue a subsequent permit required for an adaptive reuse project approved under this article if the application substantially complies with the project as it was approved pursuant to Section 65658.8. Upon receipt of an application for a subsequent permit, the local government shall process the permit without unreasonable delay and shall not impose any procedure or requirement that is not imposed on projects that are not approved pursuant to this article. The local government shall consider the application for subsequent permits based upon the applicable objective standards specified in any state or local laws that were in effect when the original adaptive reuse project application was submitted, unless the proponent agrees to a change in objective standards. Issuance of subsequent permits shall implement the approved project, and review of the permit application shall not inhibit, chill, or preclude the adaptive reuse project. For purposes of this paragraph, a subsequent permit means a permit required subsequent to receiving approval under subdivision (a) of Section 65658.8, and includes, but is not limited to, demolition, grading, encroachment, and building permits and final maps.
(b)(1)If a public improvement is necessary to implement a project subject to this article, including, but not limited to, a bicycle lane, sidewalk or walkway, public transit stop, driveway, street paving or overlay, a curb or gutter, a modified intersection, a street sign or street light, landscape or hardscape, an aboveground or underground utility connection, a water line, fire hydrant, storm or sanitary sewer connection, retaining wall, and any related work, and that public improvement is located on land owned by the local government, to the extent that the public improvement requires approval from the local government, the local government shall not exercise its discretion over any approval relating to the public improvement in a manner that would inhibit, chill, or preclude the project.
(2)If an application for a public improvement described in paragraph (1) is submitted to a local government, the local government shall do all of the following:
(A)Consider the application based upon any objective standards specified in any state or local laws that were in effect when the original adaptive reuse project application was submitted.
(B)Conduct its review and approval in the same manner as it would evaluate the public improvement if required by a project that is not eligible to receive ministerial or streamlined approval pursuant to this section.
(3)If an application for a public improvement described in paragraph (1) is submitted to a local government, the local government shall not do either of the following:
(A)Adopt or impose any requirement that applies to a project solely or partially on the basis that the project is eligible to receive ministerial or streamlined approval pursuant to this article.
(B)Unreasonably delay in its consideration, review, or approval of the application.
(c)Nothing in this article shall be interpreted to limit the applicability of Section 65913.3.
65658.10.(a)A local government shall not adopt or impose any requirement, including, but not limited to, increased fees or inclusionary housing requirements, that applies to a project solely or partially on the basis that the project is eligible to receive ministerial or streamlined approval pursuant to this article.
(b)This article shall not affect a project proponents ability to use any alternative streamlined by right permit processing adopted by a local government.
(c)Notwithstanding a housing developments consistency with the local governments general plan, Any project that qualifies as an adaptive reuse project pursuant to this article shall not prevent a project from also qualifying also qualify as a housing development project entitled to the protections of Section 65589.5.
(d)Alterations to an existing building necessary to comply with local code, the California Building Standards Code (Title 24 of the California Code of Regulations), the International Existing Building Code of the International Code Council, or the California Historical Building Code (Part 8 of Title 24 of the California Code of Regulations) shall not disqualify a qualified adaptive reuse project from the streamlined, ministerial review process established under this article.
65658.11.An adaptive reuse project approved by a local government pursuant to this part shall meet all of the following labor standards:
(a)The development proponent shall require in contracts with construction contractors, and shall certify to the local government, that the standards specified in this section will be met in project construction.
(b)A development that is not in its entirety a public work for purposes of Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of the Labor Code and approved by a local government pursuant to Sections 65658.8 and 65658.9 shall be subject to all of the following:
(1)All construction workers employed in the execution of the development shall be paid at least the general prevailing rate of per diem wages for the type of work and geographic area, as determined by the Director of Industrial Relations pursuant to Sections 1773 and 1773.9 of the Labor Code, except that apprentices registered in programs approved by the Chief of the Division of Apprenticeship Standards may be paid at least the applicable apprentice prevailing rate.
(2)The development proponent shall ensure that the prevailing wage requirement is included in all contracts for the performance of the work for those portions of the development that are not a public work.
(3)All contractors and subcontractors for those portions of the development that are not a public work shall comply with both of the following:
(A)Pay to all construction workers employed in the execution of the work at least the general prevailing rate of per diem wages, except that apprentices registered in programs approved by the Chief of the Division of Apprenticeship Standards may be paid at least the applicable apprentice prevailing rate.
(B)Maintain and verify payroll records pursuant to Section 1776 of the Labor Code and make those records available for inspection and copying as provided in that section. This subparagraph does not apply if all contractors and subcontractors performing work on the development are subject to a project labor agreement that requires the payment of prevailing wages to all construction workers employed in the execution of the development and provides for enforcement of that obligation through an arbitration procedure.
(c)(1)The obligation of the contractors and subcontractors to pay prevailing wages pursuant to this section may be enforced by any of the following:
(A)The Labor Commissioner through the issuance of a civil wage and penalty assessment pursuant to Section 1741 of the Labor Code, which may be reviewed pursuant to Section 1742 of the Labor Code, within 18 months after the completion of the project.
(B)An underpaid worker through an administrative complaint or civil action.
(C)A joint labor-management committee through a civil action under Section 1771.2 of the Labor Code.
(2)If a civil wage and penalty assessment is issued pursuant to this section, the contractor, subcontractor, and surety on a bond or bonds issued to secure the payment of wages covered by the assessment shall be liable for liquidated damages pursuant to Section 1742.1 of the Labor Code.
(3)This subdivision does not apply if all contractors and subcontractors performing work on the development are subject to a project labor agreement that requires the payment of prevailing wages to all construction workers employed in the execution of the development and provides for enforcement of that obligation through an arbitration procedure.
(d)Notwithstanding subdivision (c) of Section 1773.1 of the Labor Code, the requirement that employer payments not reduce the obligation to pay the hourly straight time or overtime wages found to be prevailing does not apply to those portions of development that are not a public work if otherwise provided in a bona fide collective bargaining agreement covering the worker.
(e)The requirement of this section to pay at least the general prevailing rate of per diem wages does not preclude use of an alternative workweek schedule adopted pursuant to Section 511 or 514 of the Labor Code. Code on developments and portions of developments that are not a public work.
(f)For purposes of this section, project labor agreement has the same meaning as set forth in paragraph (1) of subdivision (b) of Section 2500 of the Public Contract Code.65658.12.In addition to the requirements of Section 65658.11, a development of 50 or more housing units approved by a local government pursuant to this part that includes 40 or more housing units and does not include a building of more than four stories in height shall be subject to all of the following:
(a)The development proponent shall require in contracts with construction contractors and shall certify to the local government that each contractor of any tier who will employ construction craft employees or will let subcontracts for at least 1,000 hours shall satisfy the requirements in subdivisions (b) and (c). A construction contractor is deemed in compliance with subdivisions (b) and (c) if it is signatory to a valid collective bargaining agreement or project labor agreement that requires utilization of registered apprentices and expenditures on health care for employees and dependents.
(b)A contractor with construction craft employees shall either participate in an apprenticeship program approved by the California Division of Apprenticeship Standards pursuant to Section 3075 of the Labor Code, or request the dispatch of apprentices from a state-approved apprenticeship program under the terms and conditions set forth in Section 1777.5 of the Labor Code. A contractor without construction craft employees shall show a contractual obligation that its subcontractors comply with this subdivision.
(c)Each contractor with construction craft employees shall make health care expenditures for each employee in an amount per hour worked on the development equivalent to at least the hourly pro rata cost of a Covered California Platinum level plan for two 40-year-old adults and two dependents 0 to 14 years of age for the Covered California rating area in which the development is located. A contractor without construction craft employees shall show a contractual obligation that its subcontractors comply with this subdivision. Qualifying expenditures shall be credited toward compliance with prevailing wage payment requirements set forth in Section 65912.130.
(d)(1)The development proponent shall provide to the local government, on a monthly basis while its construction contracts on the development are being performed, a report demonstrating compliance with subdivisions (b) and (c). The reports shall be considered public records under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1), and shall be open to public inspection.
(2)A development proponent that fails to provide the monthly report shall be subject to a civil penalty for each month for which the report has not been provided, in the amount of 10 percent of the dollar value of construction work performed by that contractor on the development in the month in question, up to a maximum of ten thousand dollars ($10,000). Any contractor or subcontractor that fails to comply with subdivision (b) or (c) shall be subject to a civil penalty of two hundred dollars ($200) per day for each worker employed in contravention of subdivision (b) or (c).
(3)Penalties may be assessed by the Labor Commissioner within 18 months of completion of the development using the procedures for issuance of civil wage and penalty assessments specified in Section 1741 of the Labor Code, and may be reviewed pursuant to Section 1742 of the Labor Code. Penalties shall be deposited in the State Public Works Enforcement Fund established pursuant to Section 1771.3 of the Labor Code.
(e)Each construction contractor shall maintain and verify payroll records pursuant to Section 1776 of the Labor Code. Each construction contractor shall submit payroll records directly to the Labor Commissioner at least monthly in a format prescribed by the Labor Commissioner in accordance with subparagraph (A) of paragraph (3) of subdivision (a) of Section 1771.4 of the Labor Code. The records shall include a statement of fringe benefits. Upon request by a joint labor-management cooperation committee established pursuant to the Federal Labor Management Cooperation Act of 1978 (29 U.S.C. Sec. 175a), the records shall be provided pursuant to subdivision (e) of Section 1776 of the Labor Code.
(f)All construction contractors shall report any change in apprenticeship program participation or health care expenditures to the local government within 10 business days, and shall reflect those changes on the monthly report. The reports shall be considered public records pursuant to the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1) and shall be open to public inspection.
(g)A joint labor-management cooperation committee established pursuant to the Federal Labor Management Cooperation Act of 1978 (29 U.S.C. Sec. 175a) shall have standing to sue a construction contractor for failure to make health care expenditures pursuant to subdivision (c) in accordance with Section 218.7 or 218.8 of the Labor Code.
65658.13.For any development project for an adaptive reuse project that includes 40 or more housing units and that includes a building of more than four stories in height, in addition to the requirements specified in Section 65658.11, all of the following skilled and trained workforce provisions apply:
(a)Except as specified in subdivision (b), the project applicant shall enter into construction contracts with prime contractors only if all of the following conditions are satisfied:
(1)The contract contains an enforceable commitment that the prime contractor and subcontractors at every tier will use a skilled and trained workforce, as defined in Section 2601 of the Public Contract Code, to perform work on the development project that falls within an apprenticeable occupation in the building and construction trades. However, this enforceable commitment requirement shall not apply to any scopes of work where new bids are accepted pursuant to subdivision (b).
(2)The project applicant or prime contractor shall establish minimum bidding requirements for subcontractors that are objective to the maximum extent possible. The project applicant or prime contractor shall not impose any obstacles in the bid process for subcontractors that go beyond what is reasonable and commercially customary. The project applicant or prime contractor shall accept bids submitted by any bidder that meets the minimum criteria set forth in the bid solicitation.
(3)The prime contractor has provided an affidavit under penalty of perjury that, in compliance with this section, it will use a skilled and trained workforce and will obtain from its subcontractors an enforceable commitment to use a skilled and trained workforce for each scope of work in which it receives at least three bids attesting to satisfaction of the skilled and trained workforce requirements.
(4)When a prime contractor or subcontractor is required to provide an enforceable commitment that a skilled and trained workforce will be used to complete a contract or development project, the commitment shall be made in an enforceable agreement with the developer that provides the following:
(A)The prime contractor and subcontractors at every tier will comply with this section.
(B)The prime contractor will provide the project applicant, on a monthly basis while the project or contract is being performed, a report demonstrating compliance by the prime contractor.
(C)The prime contractor shall provide the project applicant, on a monthly basis while the development project or contract is being performed, the monthly reports demonstrating compliance submitted to the prime contractor by the affected subcontractors.
(b)If a prime contractor fails to receive at least three bids in a scope of construction work from subcontractors that attest to satisfying the skilled and trained workforce requirements as described in this section, the prime contractor may accept new bids for that scope of work. The prime contractor need not require that a skilled and trained workforce be used by the subcontractors for that scope of work.
(c)If the skilled and trained workforce requirements of this section apply, the prime contractor shall require subcontractors to provide, and subcontractors on the development project shall provide, both of the following to the prime contractor:
(1)An affidavit signed under penalty of perjury that a skilled and trained workforce shall be employed on the development project.
(2)Reports on a monthly basis, while the development project or contract is being performed, demonstrating compliance with this section.
(d)Upon issuing any invitation or bid solicitation for the development project, but no less than 14 business days before the bid is due, the project applicant or prime contractor shall send a notice of the invitation or solicitation that describes the development project to the following entities within the jurisdiction of the proposed development project site:
(1)Any bona fide labor organization representing workers in the building and construction trades who may perform work necessary to complete the development project and the local building and construction trades council.
(2)Any organization representing contractors that may perform work necessary to complete the development project, including any contractors association or regional builders exchange.
(e)The project applicant or prime contractor shall, within three business days of a request by a joint labor-management cooperation committee established pursuant to the federal Labor Management Cooperation 8 Act of 1978 (29 U.S.C. Sec. 175a), provide both of the following:
(1)The names and Contractors State License Board numbers of the prime contractor and any subcontractors that submitted a proposal or bid for the development project.
(2)The names and Contractors State License Board numbers of contractors and subcontractors that are under contract to perform construction work.
(f)(1)The project applicant shall provide to the locality, on a monthly basis while the development project or contract is being performed, a report demonstrating that the self-performing prime contractor and all nonexempt subcontractors used a skilled and trained workforce. A monthly report provided to the locality pursuant to this subdivision shall be a public record under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1) and shall be open to public inspection. A project applicant that fails to provide a complete monthly report shall be subject to a civil penalty of 10 percent of the dollar value of construction work performed by that contractor on the development project in the month in question, up to a maximum of ten thousand dollars ($10,000) per month for each month for which the report has not been provided.
(2)Any subcontractor or prime contractor self-performing work subject to the skilled and trained workforce requirements under this section that fails to use a skilled and trained workforce shall be subject to a civil penalty of two hundred dollars ($200) per day for each worker employed in contravention of the skilled and trained workforce requirement. Penalties may be assessed by the Labor Commissioner within 18 months of completion of the development project using the same issuance of civil wage and penalty assessments pursuant to Section 1741 of the Labor Code and may be reviewed pursuant to the same procedures in Section 1742 of the Labor Code. The prime contractor shall not be jointly liable for violations of this paragraph by subcontractors. Penalties shall be paid to the State Public Works Enforcement Fund, the locality, or the labor standards enforcement agency of the locality, depending on the lead entity performing the enforcement work.
(3)Any provision of a contract or agreement of any kind between a project applicant and a prime contractor that purports to delegate, transfer, or assign to a prime contractor any obligations of or penalties incurred by a project applicant shall be deemed contrary to public policy and shall be void and unenforceable.
(g)The requirements of this section shall not apply if all contractors, subcontractors, and craft unions performing work on the development project are subject to a multicraft project labor agreement that requires the use of a skilled and trained workforce. The multicraft project labor agreement shall include all construction crafts with applicable coverage determinations for the specified scopes of work on the development project pursuant to Section 1773 of the Labor Code and shall be executed by all applicable labor organizations regardless of affiliation.
(h)The locality shall have standing to take administrative action against or sue a construction contractor for failure to comply with this section. A prevailing lead agency shall distribute any wages and penalties to workers in accordance with law and retain any fees, additional penalties, or assessments.
65658.14.The locality, and any labor standards enforcement agency that the locality lawfully maintains, may issue a stop notice to halt further work on the development project if work is proceeding in violation of any of the labor standards described in this article.
(a)The locality or its labor standards enforcement agency shall lift the stop notice if the general contractor shows that the labor standards of this article will be followed going forward.
(b)The locality or its labor standards enforcement agency may revoke a building permit if the general contractor does not show that the labor standards of this article will be followed.
65658.15.(a)Notwithstanding any other law, an adaptive reuse project shall be exempt from all impact fees that are not reasonably related to the impacts resulting from the change of use of the site from nonresidential to residential or mixed use. Any fees charged shall be roughly proportional to the difference in impacts caused by the change of use.
(b)This section shall not apply to any adjacent portion of the project.
SEC. 5.SEC. 4.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act or because costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
The Legislature finds and declares all of the following:
(a)Converting vacant commercial space into residential housing, through adaptive reuse, could reduce underutilized and vacant buildings that have been decreasing in value, thereby helping to stabilize the commercial real estate market and filling those spaces with more valuable tax-generating uses.
(b)Adaptive reuse projects can increase activity and foot traffic in neighborhoods across the state, which helps support local businesses and enhance the cultural life of cities and towns.
(c)Adaptive reuse projects create new construction jobs and preserve historic structures.
(d)Adaptive reuse projects are more environmentally friendly than new construction by repurposing existing materials, reducing transportation emissions, and preserving embodied carbon.
(e)New housing construction, at all affordability levels, can help to mitigate, and eventually reverse, the statewide housing shortage.
SECTION 1.SEC. 2.Chapter 9 (commencing with Section 51299) is added to Part 1 of Division 1 of Title 5 of the Government Code, to read:9.Adaptive Reuse Investment Incentive Program51299.It is the intent of the Legislature in enacting this chapter to provide cities and counties with opportunities to adaptively reuse existing buildings, such as office buildings, in order to facilitate their conversion to housing and mixed uses.
51299.1.For purposes of this chapter:
(a)Adaptive reuse investment incentive funds means, with respect to a qualified adaptive reuse project property for a relevant fiscal year, an amount up to or equal to the amount of ad valorem property tax revenue allocated to the participating local agency, excluding the revenue transfers required by Sections 97.2 and 97.3 of the Revenue and Taxation Code, from the taxation of that portion of the total assessed value of the real and personal property of an adaptive reuse project property that is in excess of the qualified adaptive reuse project propertys valuation at the time of the proponents initial request for funding.
(b)Program means an adaptive reuse investment incentive program established pursuant to Section 51299.2.
(c)(1)Proponent means a party or parties that meet all of the following criteria:
(A)The party is named in the application for a permit to construct a qualified adaptive reuse project submitted to the city or county.
(B)The party will be the fee owner of the qualified adaptive reuse project property upon the completion of that development.
(2)If a proponent that is receiving capital adaptive reuse investment incentive amounts subsequently leases the qualified adaptive reuse project property to another party, the lease may provide for the payment to that lessee of any portion of adaptive reuse investment incentive funds. A lessee that receives any portion of adaptive reuse investment incentive funds shall also be considered a proponent for the purposes of this chapter.
(d)Qualified adaptive reuse project property means an adaptive reuse project proposed pursuant to Article 11.5 (commencing with Section 65658) of Chapter 3 of Division 1 of Title 7 that is located within the city or county.
51299.2.(a)Commencing in the 202425 fiscal year, the governing body of a city or county county, or city and county, may, by ordinance or resolution, establish an adaptive reuse investment incentive program pursuant to this chapter.
(b)(1)A city or county county, or city and county, that establishes a program shall, upon the approval by a majority of the entire membership of its governing body of a written request therefor, pay adaptive reuse investment incentive funds to the proponent of a qualified adaptive reuse project property to subsidize the affordable housing units, as required pursuant to Article 11.5 (commencing with Section 65658) of Chapter 3 of Division 1 of Title 7, for up to 15 30 consecutive fiscal years. Nothing in this paragraph shall prohibit a city or county, or city and county, from paying adaptive reuse investment incentive funds to a proponent pursuant to this paragraph for a period of fewer than 30 years.
(2)A request for the payment of adaptive reuse investment incentive funds shall be filed by a proponent in writing with the governing body of the city or county in the time and manner established by that governing body.
(c)After a city or county county, or city and county, approves a request for the payment of adaptive reuse investment incentive funds, payment of adaptive reuse investment incentive funds shall begin with the first fiscal year that commences after the qualified adaptive reuse property is issued a certificate of occupancy.
51299.3.A city or special district may pay to the city or county county, or city and county, an amount equal to the amount of ad valorem property tax revenue allocated to that city or special district, but not the actual allocation, derived from the taxation of that portion of the total assessed value of that real property that is in excess of the propertys valuation at the time of the proponents initial request for funding, for the purpose of subsidizing the affordable housing units required pursuant to Article 11.5 (commencing with Section 65658) of Chapter 3 of Division 1 of Title 7.
SEC. 2.SEC. 3.Section 65585 of the Government Code is amended to read:65585.(a)In the preparation of its housing element, each city and county shall consider the guidelines adopted by the department pursuant to Section 50459 of the Health and Safety Code. Those guidelines shall be advisory to each city or county in the preparation of its housing element.
(b)(1)At least 90 days prior to adoption of a revision of its housing element pursuant to subdivision (e) of Section 65588, or at least 60 days prior to the adoption of a subsequent amendment to this element, the planning agency shall submit a draft element revision or draft amendment to the department. The local government of the planning agency shall make the first draft revision of a housing element available for public comment for at least 30 days and, if any comments are received, the local government shall take at least 10 business days after the 30-day public comment period to consider and incorporate public comments into the draft revision prior to submitting it to the department. For any subsequent draft revision, the local government shall post the draft revision on its internet website and shall email a link to the draft revision to all individuals and organizations that have previously requested notices relating to the local governments housing element at least seven days before submitting the draft revision to the department.
(2)The planning agency staff shall collect and compile the public comments regarding the housing element received by the city, county, or city and county and provide these comments to each member of the legislative body before it adopts the housing element.
(3)The department shall review the draft and report its written findings to the planning agency within 90 days of its receipt of the first draft submittal for each housing element revision pursuant to subdivision (e) of Section 65588 or within 60 days of its receipt of a subsequent draft amendment or an adopted revision or adopted amendment to an element. The department shall not review the first draft submitted for each housing element revision pursuant to subdivision (e) of Section 65588 until the local government has made the draft available for public comment for at least 30 days and, if comments were received, has taken at least 10 business days to consider and incorporate public comments pursuant to paragraph (1).
(c)In the preparation of its findings, the department may consult with any public agency, group, or person. The department shall receive and consider any written comments from any public agency, group, or person regarding the draft or adopted element or amendment under review.
(d)In its written findings, the department shall determine whether the draft element or draft amendment substantially complies with this article.
(e)Prior to the adoption of its draft element or draft amendment, the legislative body shall consider the findings made by the department. If the departments findings are not available within the time limits set by this section, the legislative body may act without them.
(f)If the department finds that the draft element or draft amendment does not substantially comply with this article, the legislative body shall take one of the following actions:
(1)Change the draft element or draft amendment to substantially comply with this article.
(2)Adopt the draft element or draft amendment without changes. The legislative body shall include in its resolution of adoption written findings that explain the reasons the legislative body believes that the draft element or draft amendment substantially complies with this article despite the findings of the department.
(g)Promptly following the adoption of its element or amendment, the planning agency shall submit a copy to the department.
(h)The department shall, within 60 days, review adopted housing elements or amendments and report its findings to the planning agency.
(i)(1)(A)The department shall review any action or failure to act by the city, county, or city and county that it determines is inconsistent with an adopted housing element or Section 65583, including any failure to implement any program actions included in the housing element pursuant to Section 65583. The department shall issue written findings to the city, county, or city and county as to whether the action or failure to act substantially complies with this article, and provide a reasonable time no longer than 30 days for the city, county, or city and county to respond to the findings before taking any other action authorized by this section, including the action authorized by subparagraph (B).
(B)If the department finds that the action or failure to act by the city, county, or city and county does not substantially comply with this article, and if it has issued findings pursuant to this section that an amendment to the housing element substantially complies with this article, the department may revoke its findings until it determines that the city, county, or city and county has come into compliance with this article.
(2)The department may consult with any local government, public agency, group, or person, and shall receive and consider any written comments from any public agency, group, or person, regarding the action or failure to act by the city, county, or city and county described in paragraph (1), in determining whether the housing element substantially complies with this article.
(j)The department shall notify the city, county, or city and county and may notify the office of the Attorney General that the city, county, or city and county is in violation of state law if the department finds that the housing element or an amendment to this element, or any action or failure to act described in subdivision (i), does not substantially comply with this article or that any local government has taken an action in violation of the following:
(1)Housing Accountability Act (Section 65589.5).
(2)Section 65863.
(3)Chapter 4.3 (commencing with Section 65915).
(4)Section 65008.
(5)Housing Crisis Act of 2019 (Chapter 654, Statutes of 2019, Sections 65941.1, 65943, and 66300).
(6)Section 8899.50.
(7)Section 65913.4.
(8)Article 11 (commencing with Section 65650).
(9)Article 12 (commencing with Section 65660).
(10)Section 65913.11.
(11)Section 65400.
(12)Section 65863.2.
(13)Chapter 4.1 (commencing with Section 65912.100).
(14)Section 65905.5.
(15)Chapter 13 (commencing with Section 66310).
(16)Section 65852.21.
(17)Section 65852.24.
(18)Section 66411.7.
(19)Section 65913.16.
(20)Article 2 (commencing with Section 66300.5) of Chapter 12.
(21)Section 65852.28.
(22)Section 65913.4.5.
(23)Section 66499.41.
(24)Article 11.5 (commencing with Section 65658).
(k)Commencing July 1, 2019, prior to the Attorney General bringing any suit for a violation of the provisions identified in subdivision (j) related to housing element compliance and seeking remedies available pursuant to this subdivision, the department shall offer the jurisdiction the opportunity for two meetings in person or via telephone to discuss the violation, and shall provide the jurisdiction written findings regarding the violation. This paragraph does not affect any action filed prior to the effective date of this section. The requirements set forth in this subdivision do not apply to any suits brought for a violation or violations of paragraphs (1) and (3) to (9), inclusive, of subdivision (j).
(l)In any action or special proceeding brought by the Attorney General relating to housing element compliance pursuant to a notice or referral under subdivision (j), the Attorney General may request, upon a finding of the court that the housing element does not substantially comply with the requirements of this article pursuant to this section, that the court issue an order or judgment directing the jurisdiction to bring its housing element into substantial compliance with the requirements of this article. The court shall retain jurisdiction to ensure that its order or judgment is carried out. If a court determines that the housing element of the jurisdiction substantially complies with this article, it shall have the same force and effect, for purposes of eligibility for any financial assistance that requires a housing element in substantial compliance and for purposes of any incentives provided under Section 65589.9, as a determination by the department that the housing element substantially complies with this article.
(1)If the jurisdiction has not complied with the order or judgment after 12 months, the court shall conduct a status conference. Following the status conference, upon a determination that the jurisdiction failed to comply with the order or judgment compelling substantial compliance with the requirements of this article, the court shall impose fines on the jurisdiction, which shall be deposited into the Building Homes and Jobs Trust Fund. Any fine levied pursuant to this paragraph shall be in a minimum amount of ten thousand dollars ($10,000) per month, but shall not exceed one hundred thousand dollars ($100,000) per month, except as provided in paragraphs (2) and (3). In the event that the jurisdiction fails to pay fines imposed by the court in full and on time, the court may require the Controller to intercept any available state and local funds and direct such funds to the Building Homes and Jobs Trust Fund to correct the jurisdictions failure to pay. The intercept of the funds by the Controller for this purpose shall not violate any provision of the California Constitution.
(2)If the jurisdiction has not complied with the order or judgment after three months following the imposition of fees described in paragraph (1), the court shall conduct a status conference. Following the status conference, if the court finds that the fees imposed pursuant to paragraph (1) are insufficient to bring the jurisdiction into compliance with the order or judgment, the court may multiply the fine determined pursuant to paragraph (1) by a factor of three. In the event that the jurisdiction fails to pay fines imposed by the court in full and on time, the court may require the Controller to intercept any available state and local funds and direct such funds to the Building Homes and Jobs Trust Fund to correct the jurisdictions failure to pay. The intercept of the funds by the Controller for this purpose shall not violate any provision of the California Constitution.
(3)If the jurisdiction has not complied with the order or judgment six months following the imposition of fees described in paragraph (1), the court shall conduct a status conference. Upon a determination that the jurisdiction failed to comply with the order or judgment, the court may impose the following:
(A)If the court finds that the fees imposed pursuant to paragraphs (1) and (2) are insufficient to bring the jurisdiction into compliance with the order or judgment, the court may multiply the fine determined pursuant to paragraph (1) by a factor of six. In the event that the jurisdiction fails to pay fines imposed by the court in full and on time, the court may require the Controller to intercept any available state and local funds and direct such funds to the Building Homes and Jobs Trust Fund to correct the jurisdictions failure to pay. The intercept of the funds by the Controller for this purpose shall not violate any provision of the California Constitution.
(B)The court may order remedies available pursuant to Section 564 of the Code of Civil Procedure, under which the agent of the court may take all governmental actions necessary to bring the jurisdictions housing element into substantial compliance pursuant to this article in order to remedy identified deficiencies. The court shall determine whether the housing element of the jurisdiction substantially complies with this article and, once the court makes that determination, it shall have the same force and effect, for all purposes, as the departments determination that the housing element substantially complies with this article. An agent appointed pursuant to this paragraph shall have expertise in planning in California.
(4)This subdivision does not limit a courts discretion to apply any and all remedies in an action or special proceeding for a violation of any law identified in subdivision (j).
(m)In determining the application of the remedies available under subdivision (l), the court shall consider whether there are any mitigating circumstances delaying the jurisdiction from coming into compliance with state housing law. The court may consider whether a city, county, or city and county is making a good faith effort to come into substantial compliance or is facing substantial undue hardships.
(n)Nothing in this section shall limit the authority of the office of the Attorney General to bring a suit to enforce state law in an independent capacity. The office of the Attorney General may seek all remedies available under law including those set forth in this section.
(o)Notwithstanding Sections 11040 and 11042, if the Attorney General declines to represent the department in any action or special proceeding brought pursuant to a notice or referral under subdivision (j), the department may appoint or contract with other counsel for purposes of representing the department in the action or special proceeding.
(p)Notwithstanding any other provision of law, the statute of limitations set forth in subdivision (a) of Section 338 of the Code of Civil Procedure shall apply to any action or special proceeding brought by the office of the Attorney General or pursuant to a notice or referral under subdivision (j), or by the department pursuant to subdivision (o).
SEC. 3.SEC. 4.Article 11.5 (commencing with Section 65658) is added to Chapter 3 of Division 1 of Title 7 of the Government Code, to read:11.5.Office to Housing Conversion Act 1. General Provisions 65658.This article may be cited as the Office to Housing Conversion Act.
65658.1.For purposes of this article:
(a)(1)Adaptive reuse project means the retrofitting and repurposing of an existing building to create new residential or mixed uses including office conversion projects.
(2)(A)Adaptive reuse project shall not include the retrofitting and repurposing of any light industrial use, unless the planning director or equivalent position determines that the specific light industrial use is no longer useful for industrial purposes. finds, based on substantial evidence in the record, that the building is no longer economically viable for industrial use or uses.
(B)A finding described in subparagraph (A) that a building for industrial use is no longer economically viable shall not be considered a project under the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code).
(b)Adjacent portion of the project means the portion of the project located on a site adjacent to the proposed repurposed existing building. building, including on the same parcel as the proposed repurposed existing building.
(c)Broadly applicable housing affordability requirement means a local ordinance or other regulation that requires a minimum percentage of affordable units and that applies to a variety of housing development types or entitlement pathways.
(d)Impact fee means any fee imposed pursuant to Chapter 5 (commencing with Section 66000).
(e)Historical resource means the same as defined in subdivision (j) of Section 5020.1 of the Public Resources Code, or a resource listed in the California Register of Historical Resources as described in Section 5024.1 of the Public Resources Code.
(f)Light industrial use means a use that is not subject to permitting by a district, as defined in Section 39025 of the Health and Safety Code.(g)(f)Local affordable housing requirement means either of the following:
(1)A local government requirement that a housing development project include a certain percentage of units affordable to, and occupied by, extremely low, very low, lower, or moderate-income households as a condition of development of residential units.
(2)A local government requirement allowing a housing development project to be a use by right if the project includes a certain percentage of units affordable to, and occupied by, extremely low, very low, lower, or moderate-income households as a condition of development of residential units.
(h)(g)Local government means a city, including a charter city, a county, or a city and county.
(i)(h)Mixed use means residential uses combined with at least one other land use, but not including any industrial use.
(j)(i)Office conversion project means the conversion of a building used for office purposes or a vacant office building into residential dwelling units.
(k)(j)Persons and families of low or moderate income means the same as defined in Section 50093 of the Health and Safety Code.
(l)(k)Phase I environmental assessment means the same as defined in Section 78090 of the Health and Safety Code.
(m)(l)Phase II environmental assessment means the same as defined in Section 25403 of the Health and Safety Code.
(n)(m)Preliminary endangerment assessment means the same as defined in Section 78095 of the Health and Safety Code.
(o)(n)Residential uses includes, but is not limited to, housing units, dormitories, boarding houses, and group housing. housing, and other congregate residential uses. Residential uses does not include prisons or jails.
(o)Urban uses has the same meaning as defined in Section 65912.101.
(p)Use by right means that the citys or countys review of the adaptive reuse project may not require a conditional use permit, planned unit development permit, or other discretionary city or county review or approval that would constitute a project for purposes of Division 13 (commencing with Section 21000) of the Public Resources Code. Any subdivision of the sites shall be subject to all laws, including, but not limited to, a city or county ordinance implementing the Subdivision Map Act (Division 2 (commencing with Section 66410)).
65658.3.(a)A local government may adopt an ordinance to implement this article and specify the process and requirements applicable to adaptive reuse projects, provided that the ordinance is consistent with, and does not inhibit the objectives of, this article.
(b)An ordinance adopted pursuant to subdivision (a) shall not be considered a project under the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code).
(c)A local agency that has not adopted an ordinance governing adaptive reuse pursuant to subdivision (a) shall ministerially without discretionary review approve or disapprove applications the local agency receives for a permit to create or serve an adaptive reuse project pursuant to this article.
65658.4.The Legislature finds and declares that this article addresses a matter of statewide concern rather than a municipal affair as that term is used in Section 5 of Article XI of the California Constitution. Therefore, this article applies to all cities, including charter cities.
2. Streamlined, Ministerial Approval 65658.5.(a)An adaptive reuse project that meets the requirements of subdivision (b) shall be deemed a use by right in all zones, regardless of the zoning of the site, and subject to the streamlined, ministerial review process described in Section 65658.7, 65658.8, except that the any nonresidential uses of a proposed mixed-use adaptive reuse project shall be consistent with the land uses allowed by the zoning or a continuation of an existing zoning nonconforming use.
(b)An adaptive reuse project shall comply with all of the following requirements:
(1)The adaptive reuse project and the site on which it is located shall satisfy both of the following:
(A)It is a legal parcel or parcels located in a city if, and only if, the city boundaries include some portion of either an urbanized area or urban cluster, as designated by the United States Census Bureau, or, for unincorporated areas, a legal parcel or parcels wholly within the boundaries of an urbanized area or urban cluster, as designated by the United States Census Bureau.
(B)At least 75 percent of the perimeter of the site adjoins parcels that are developed with urban uses. For the purposes of this section, parcels that are only separated by a street or highway street, highway, or any other right of way shall be considered to be adjoined.
(2)The adaptive reuse project is proposed for any of the following, as applicable:
(A)The project is proposed for an existing building that is less than 50 years old.
(B)The project is proposed for an existing building that is listed on a local, state, or federal register of historic resources and the adaptive reuse project proponent complies with Section 65658.7.
(C)The project is proposed for an existing building that is more than 50 years old and the local government has evaluated the site through a preliminary application submitted pursuant to subdivision (a) of Section 65658.7 and either of the following are satisfied:
(i)The local government determines that the building or site is a historic resource and the adaptive reuse project proponent complies with Section 65658.7.
(ii)The local government determines that the building or site is not a historic resource.
(3)The adaptive reuse project meets the following affordability criteria, as applicable:
(A)(i)An adaptive reuse project for rental housing shall include either of the following:
(I)Eight percent of the units for very low income households and 5 percent of the units for extremely low income households.
(II)Fifteen percent of the units for lower income households.
(ii)The development proponent shall agree to, and the local government shall require, the continued affordability of all affordable rental units included pursuant to this subdivision through a recorded affordability restriction for a period of 55 years. Rents shall be set at an affordable rent, as defined in Section 50053 of the Health and Safety Code.
(B)(i)An adaptive reuse project for owner-occupied housing shall comply with either of the following:
(I)Thirty percent of the units shall be offered at an affordable housing cost, as defined in Section 50052.5 of the Health and Safety Code, to moderate-income households.
(II)Fifteen percent of the units shall be offered at an affordable housing cost, as defined in Section 50052.5 of the Health and Safety Code, to lower income households.
(ii)The development proponent shall agree to, and the local government shall require, the continued affordability of all affordable ownership units through a recorded affordability restriction for a period of 45 years.
(C)If the local government has a local affordable housing requirement, the housing development project shall comply with all of the following:
(i)The development project shall include the percentage of affordable units required by this section or the local requirement, whichever is higher.
(ii)The development project shall meet the lowest income targeting required by either this section or the local requirement.
(iii)If the local affordable housing requirement requires greater than 15 percent of the units to be dedicated for lower income households and does not require the inclusion of units affordable to very low and extremely low income households, then the rental housing development shall do both of the following:
(I)Include 8 percent of the units for very low income households and 5 percent of the units for extremely low income households.
(II)Fifteen percent of units affordable to lower income households shall be subtracted from the percentage of units required by the local policy at the highest required affordability level.
(D)Affordable units in the development project shall have the same bedroom and bathroom count ratio as the market rate units, be equitably distributed within the project, and have the same type or quality of appliances, fixtures, and finishes.
(4)If the adaptive reuse project includes mixed uses, at least one-half of the square footage of the adaptive reuse project shall be dedicated to residential uses. For purposes of this subparagraph, square footage of the project does not include underground space, including basements or underground parking garages.
(5)(A)The adaptive reuse project proponent completes a Phase I environmental assessment, and a Phase II environmental assessment, if warranted.(5)(A)The local government shall, as a condition of approval of the development, require the development proponent to complete a Phase I environmental assessment.
(B)If a recognized environmental condition is found, the adaptive reuse project development proponent shall undertake a preliminary endangerment assessment assessment, as defined in Section 78095 of the Health and Safety Code, prepared by an environmental assessor to determine the existence of any release of a hazardous substance on the site and to determine the potential for exposure of future occupants to significant health hazards from any nearby property or activity.
(i)If a release of a hazardous substance is found to exist on the site, prior to before the local government issues a certificate of occupancy, the project proponent shall agree to remove the release release shall be removed, or any significant effect effects of the release shall be mitigated to a level of insignificance in compliance with current state and federal requirements.
(ii)If a potential for exposure to significant hazards from surrounding properties or activities is found to exist, before the local government issues a certificate of occupancy, the effects of the potential exposure shall be mitigated to a level of insignificance in compliance with current state and federal requirements.
(6)The adaptive reuse project complies with all objective planning standards found in an ordinance adopted pursuant to Section 65658.3.
(c)An adaptive reuse project that meets all the requirements of subdivision (b) may include rooftop structures that exceed any applicable height limitation imposed by the local government, provided that the rooftop structure does not exceed one story and is used for shared amenities. amenities or equipment, including, but not limited to, shared cooking facilities, exercise facilities, common area lounges, or mechanical and stair penthouse facilities.
(d)(1)Parking shall not be required for the portion of a project consisting of a building subject to adaptive reuse that does not have existing onsite parking.
(2)This article shall not reduce, eliminate, or preclude the enforcement of any requirement imposed on a new multifamily residential or nonresidential development to provide bicycle parking, if feasible.
(3)This article shall not reduce, eliminate, or preclude the enforcement of any requirement imposed on a project that includes existing onsite parking to provide electric vehicle supply equipment installed parking spaces or parking spaces that are accessible to persons with disabilities that would have otherwise applied to the development if this section did not apply.
(e)An adaptive reuse project shall not violate the terms of any conservation easement applicable to the site.
(f)(1)A housing development proposed pursuant to this article shall be eligible for a density bonus, incentives or concessions, waivers or reductions of development standards, and parking ratios pursuant to Section 65915.
(2)For the purpose of calculating a density bonus for a project proposed pursuant to this article, the base density of an adaptive reuse project shall be the density proposed by the developer, including the portion of a project consisting of a building with a proposed change in use and any adjacent portion of the project, notwithstanding any general plan density limit as described in paragraph (6) of subdivision (o) of Section 65915.
(3)The affordability criteria described in paragraph (3) of subdivision (b) shall apply to the base density of the project, and shall not apply to any bonus units proposed pursuant to section 65915.
(g)A housing development proposed to adaptively reuse a building shall not be eligible for a density bonus waiver or incentive that has the effect of increasing the height of the adaptively reused building above what is allowed under subdivision (c).
65658.6.(a)An adaptive reuse project that satisfies the requirements of Section 65658.5 may include the development of new residential or mixed-use structures on undeveloped areas and parking areas located on the same parcel as the proposed repurposed building, or on the parcels adjacent to the proposed adaptive reuse project site if all of the following requirements are met:
(1)The adjacent portion of the project on the site adjacent to the proposed repurposed existing building complies with the requirements of any of the following:
(A)The requirements of paragraph (5) of subdivision (a) of Section 65913.4.
(B)The requirements of the Affordable Housing and High Road Jobs Act of 2022 (Chapter 4.1 (commencing with Section 65912.100)).
(C)The requirements of the Middle Class Housing Act of 2022 (Section 65852.24).
(2)The adjacent portion of the project is located on a parcel that satisfies the requirements specified in subparagraphs (A) and (B) of paragraph (2) of subdivision (a) of Section 65913.4.
(3)The adjacent portion of the project is located on a parcel that satisfies the requirements specified in subparagraphs (B) to (K), inclusive, of paragraph (6) of subdivision (a) of Section 65913.4. 65913.4, exclusive of clause (iv) of subparagraph (A) of that paragraph.
(4)The adjacent portion of the project is located on a parcel that satisfies the requirements specified in paragraph (7) of subdivision (a) of Section 65913.4.
(5)The applicant and local agency comply with the requirements of subdivision (b) of Section 65913.4.
(6)Any existing open space on the proposed project site is not a contributor to a historic resource.
(b)The adjacent portion of the project shall be eligible for a density bonus, incentives or concessions, waivers or reductions of development standards, and parking ratios pursuant to Section 65915.
(c)For purposes of this section, adjacent portion of the project means the portion of the project located on a site adjacent to the proposed repurposed existing building.
65658.7.(a)(1)Before submitting an application for an adaptive reuse project pursuant to Section 65658.5 for a structure that is more than 50 years old and not listed on a local, state, or federal register of historic resources, the development proponent shall submit to the local government a notice of its intent to submit an application. The notice of intent shall be in the form of a preliminary application that includes all of the information described in Section 65941.1.
(2)Upon receipt of a notice of intent to submit an application described in subdivision (a), the local government shall evaluate the project site for historical resources. The local government shall make a historic resource significance determination within 90 days of submission of the notice of intent for purposes of paragraph (1) of subdivision (b) of Section 65658.5.
(3)Submission of a notice of intent pursuant to this section does not constitute owner consent for determination of eligibility for the California or national registers of historic places. Any determination of historic resource significance made pursuant to this subdivision shall apply only for the purposes of this article and shall not affect or be applicable to any other law.
(b)If the adaptive reuse project is proposed for an existing building that is listed on a local, state, or federal register of historic resources or if the local government has determined that the project site is a significant historic resource pursuant to subdivision (a), the adaptive reuse project proponent shall sign an affidavit declaring that the project will only move forward if it complies with either of the following:
(1)The United States Secretary of the Interiors Standards for Rehabilitation, as found in Part 67 of Title 36 of the Code of Federal Regulations. Regulations, for the preservation of exterior facades of a building that face a street, interior facades of a building that face a courtyard, and interior spaces of a building that are publicly accessible and character defining, including ground floor lobbies. Exterior facades that do not face a street, interior facades that do not face a courtyard, and interior spaces that are not publicly accessible and character defining may be modified without regard to the United States Secretary of the Interiors Standards for Rehabilitation.
(2)The project is awarded federal historic rehabilitation tax credits pursuant to Section 47 of the Internal Revenue Code, or state historic rehabilitation tax credits pursuant to Section 17053.91 or 23691 of the Revenue and Taxation Code.
(c)(1)(A)Notwithstanding subdivision (b), if the adaptive reuse project is proposed for a site that is listed on a local, state, or federal historic register and the adaptive reuse project proponent does not sign an affidavit pursuant to subdivision (b), the local government shall process the adaptive reuse project pursuant to Section 65658.5, 65658.8, but the local government may deny or conditionally approve the project if the local government makes a finding finding, based upon a preponderance of evidence in the record, that the project will cause a significant adverse impact to historic resources. A
(B)A local agency may impose conditions of approval to mitigate impacts to historic resources and to comply with the United States Secretary of the Interiors Standards for Rehabilitation, as found in Part 67 of Title 36 of the Code of Federal Regulations, for the preservation of exterior facades of a building that face a street and interior spaces of a building that are publicly accessible and character defining, including ground floor lobbies, but shall not impose other conditions of approval. Exterior facades that do not face a street and interior spaces that are not publicly accessible and character defining shall not be required to be preserved according to the United States Secretary of the Interiors Standards for Rehabilitation.
(2)Review of an An adaptive reuse project pursuant to this section shall not constitute a project for purposes of Division 13 (commencing with Section 21000) of the Public Resources Code.
(d)For the purposes of this article, a local governments evaluation of a site for historical resources and review of an adaptive reuse project for consistency with the United States Secretary of Interiors Standards for Rehabilitation shall be conducted by a person who meets the United States Secretary of the Interiors Professional Qualifications Standards, as published in Part 67 (commencing with Section 67.1) of Title 36 of the Code of Federal Regulations. Any revised professional qualifications standards adopted by the Secretary of the Interior that supersede the standards described in this paragraph shall apply.
65658.8.(a)(1)Notwithstanding any local law, if a local governments planning director or equivalent position determines that an adaptive reuse project submitted pursuant to this article is consistent with the objective planning standards specified in Section 65658.5 and Section 65658.6, if applicable, the local government shall approve the adaptive reuse project. Upon a determination that an adaptive reuse project submitted pursuant to this section is in conflict with any of the objective planning standards specified in Section 65658.5 or Section 65658.6, if applicable, the local government staff or relevant local planning and permitting department that made the determination shall provide the development proponent written documentation of which standard or standards the development conflicts with, and an explanation for the reason or reasons the development conflicts with that standard or standards, as follows:
(A)Within 60 days of submittal of the adaptive reuse project to the local government pursuant to this section if the project contains 150 or fewer housing units.
(B)Within 90 days of submittal of the adaptive reuse project to the local government pursuant to this section if the project contains more than 150 housing units.
(2)If the local governments planning director or equivalent position fails to provide the required documentation pursuant to paragraph (1), the adaptive reuse project shall be deemed to satisfy the objective planning standards specified in Section 65658.5 and Section 65658.6, if applicable.
(3)For purposes of this section, an adaptive reuse project is consistent with the objective planning standards specified in Section 65658.5 and Section 65658.6, if applicable, if there is substantial evidence that would allow a reasonable person to conclude that the project is consistent with the objective planning standards. The local government shall not determine that an adaptive reuse project, including an application for a modification under subdivision (f), is in conflict with the objective planning standards on the basis that application materials are not included, if the application contains substantial evidence that would allow a reasonable person to conclude that the project is consistent with the objective planning standards.
(4)Upon submittal of an application for streamlined, ministerial approval pursuant to this section to the local government, all departments of the local government that are required to issue an approval of the adaptive reuse project before the granting of an entitlement shall comply with the requirements of this section within the time periods specified in paragraph (1).
(b)(1)Any design review of the adjacent portion of the project may be conducted by the local governments planning commission or any equivalent board or commission responsible for design review. That design review shall be objective and be strictly focused on assessing compliance with the criteria required for streamlined projects. That design review shall be completed, and if the project is consistent with all applicable objective standards, the local government shall approve the project as follows and shall not in any way inhibit, chill, or preclude the ministerial approval provided by this article or its effect, as applicable:
(A)Within 90 days of submittal of the qualified adaptive reuse project to the local government pursuant to this section if the project contains 150 or fewer housing units.
(B)Within 180 days of submittal of the qualified adaptive reuse project to the local government pursuant to this section if the project contains more than 150 housing units.
(2)If the adaptive reuse project is consistent with the requirements of Section 65658.5 and Section 65658.6, if applicable, and is consistent with all objective subdivision standards in the local subdivision ordinance, an application for a subdivision pursuant to the Subdivision Map Act (Division 2 (commencing with Section 66410)) shall be exempt from the requirements of the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code) and shall be subject to the public oversight timelines set forth in paragraph (1).
(3)If a local government determines that an adaptive reuse project submitted pursuant to this article is in conflict with any of the standards imposed pursuant to paragraph (1), it shall provide the project proponent written documentation of which objective standard or standards the adaptive reuse project conflicts with, and an explanation for the reason or reasons the project conflicts with, that objective standard or standards consistent with the timelines described in paragraph (1) of subdivision (a).
(c)(1)Notwithstanding any law, a local government, whether or not it has adopted an ordinance governing automobile parking requirements in multifamily developments, shall not impose automobile parking standards for an adjacent portion of the project that was approved pursuant to this article in any of the following instances:
(A)The adjacent portion of the project is located within one-half mile of public transit.
(B)The adjacent portion of the project is located within an architecturally and historically significant historic district.
(C)When on-street parking permits are required but not offered to the occupants of the adjacent portion of the project.
(D)When there is a car share vehicle located within one block of the adjacent portion of the project.
(2)If the adjacent portion of the project does not fall within any of the categories described in paragraph (1), the local government shall not impose automobile parking requirements for the adjacent portion of the project approved pursuant to this article that exceed one parking space per unit.
(d)Notwithstanding any other law, a local government shall not require any of the following prior to approving an adaptive reuse project that meets the requirements of this article:
(1)Studies, information, or other materials that do not pertain directly to determining whether the adaptive reuse project is consistent with the objective planning standards applicable to the development.
(2)(A)Compliance with any standards necessary to receive a postentitlement permit.
(B)This paragraph does not prohibit a local agency from requiring compliance with any standards necessary to receive a postentitlement permit after a permit has been issued pursuant to this section.
(C)For purposes of this paragraph, postentitlement permit has the same meaning as provided in subparagraph (A) of paragraph (3) of subdivision (j) of Section 65913.3.
(e)(1)If a local government approves an adaptive reuse project pursuant to this article, then, notwithstanding any other law, that approval shall not expire if the project satisfies both of the following requirements:
(A)The project includes public investment in housing affordability, beyond tax credits.
(B)At least 20 percent of the units are affordable to households making at or below 80 percent of the area median income.
(2)(A)If a local government approves an adaptive reuse project pursuant to this article, and the project does not satisfy the requirements of subparagraphs (A) and (B) of paragraph (1), that approval shall remain valid for three years from the date of the final action establishing that approval, or if litigation is filed challenging that approval, from the date of the final judgment upholding that approval. Approval shall remain valid for a project provided construction activity, including demolition and grading activity, on the development site has begun pursuant to a permit issued by the local jurisdiction and is in progress. For purposes of this subdivision, in progress means one of the following:
(i)Construction has begun and has not ceased for more than 180 365 days.
(ii)If the project requires multiple building permits, an initial phase has been completed, and the project proponent has applied for and is diligently pursuing a building permit for a subsequent phase, provided that once it has been issued, the building permit for the subsequent phase does not lapse.
(B)Notwithstanding subparagraph (A), a local government may grant a project a one-time, one-year extension if the project proponent can provide documentation that there has been significant progress toward getting the adaptive reuse project construction ready, such as filing a building permit application.
(3)If the qualified adaptive reuse project proponent requests a modification pursuant to subdivision (f), then the time during which the approval shall remain valid shall be extended for the number of days between the submittal of a modification request and the date of its final approval, plus an additional 180 days to allow time to obtain a building permit. If litigation is filed relating to the modification request, the time shall be further extended during the pendency of the litigation. The extension required by this paragraph shall only apply to the first request for a modification submitted by the development proponent.
(f)(1)(A)A development proponent may request a modification to a qualified adaptive reuse project that has been approved under the streamlined approval process provided in this article if that request is submitted to the local government before the issuance of the final building permit required for construction of the adaptive reuse project.
(B)Except as provided in paragraph (3), the local government shall approve a modification if it determines that the modification is consistent with the objective planning standards specified in subdivision (a) that were in effect when the original adaptive reuse project application was first submitted.
(C)The local government shall evaluate any modifications requested pursuant to this subdivision for consistency with the objective planning standards using the same assumptions and analytical methodology that the local government originally used to assess consistency for the adaptive reuse project that was approved for streamlined, ministerial approval pursuant to subdivision (a).
(2)Upon receipt of the adaptive reuse project proponents application requesting a modification, the local government shall determine if the requested modification is consistent with the objective planning standard and either approve or deny the modification request within 60 days after submission of the modification, or within 90 days if design review is required.
(3)Notwithstanding paragraph (1), the local government may apply objective planning standards to an adjacent portion of the project adopted after the project application was first submitted to the requested modification in any of the following instances:
(A)The adjacent portion of the project is revised such that the total number of residential units or total square footage of construction changes by 15 percent or more. The calculation of the square footage of construction changes shall not include underground space.
(B)The adjacent portion of the project is revised such that the total number of residential units or total square footage of construction changes by 5 percent or more and it is necessary to subject the project to an objective standard beyond those in effect when the project application was submitted in order to mitigate or avoid a specific, adverse impact, as that term is defined in subparagraph (A) of paragraph (1) of subdivision (j) of Section 65589.5, upon the public health or safety and there is no feasible alternative method to satisfactorily mitigate or avoid the adverse impact. The calculation of the square footage of construction changes shall not include underground space.
(C)Objective building standards contained in the California Building Standards Code (Title 24 of the California Code of Regulations), the International Existing Building Code of the International Code Council, or the California Historical Building Code (Part 8 of Title 24 of the California Code of Regulations) including, but not limited to, building plumbing, electrical, fire, and grading codes, may be applied to all modification applications that are submitted prior to the first building permit application. Those standards may be applied to modification applications submitted after the first building permit application if agreed to by the development proponent.
(4)The local governments review of a modification request pursuant to this subdivision shall be strictly limited to determining whether the modification, including any modification to previously approved density bonus concessions or waivers, modify the projects consistency with the renders the project inconsistent with the applicable objective planning standards and shall not reconsider prior determinations that are not affected by the modification.
65658.9.(a)A local government shall issue a subsequent permit required for an adaptive reuse project approved under this article if the application substantially complies with the project as it was approved pursuant to Section 65658.8. Upon receipt of an application for a subsequent permit, the local government shall process the permit without unreasonable delay and shall not impose any procedure or requirement that is not imposed on projects that are not approved pursuant to this article. The local government shall consider the application for subsequent permits based upon the applicable objective standards specified in any state or local laws that were in effect when the original adaptive reuse project application was submitted, unless the proponent agrees to a change in objective standards. Issuance of subsequent permits shall implement the approved project, and review of the permit application shall not inhibit, chill, or preclude the adaptive reuse project. For purposes of this paragraph, a subsequent permit means a permit required subsequent to receiving approval under subdivision (a) of Section 65658.8, and includes, but is not limited to, demolition, grading, encroachment, and building permits and final maps, if necessary. maps.
(b)(1)If a public improvement is necessary to implement a project subject to this article, including, but not limited to, a bicycle lane, sidewalk or walkway, public transit stop, driveway, street paving or overlay, a curb or gutter, a modified intersection, a street sign or street light, landscape or hardscape, an aboveground or underground utility connection, a water line, fire hydrant, storm or sanitary sewer connection, retaining wall, and any related work, and that public improvement is located on land owned by the local government, to the extent that the public improvement requires approval from the local government, the local government shall not exercise its discretion over any approval relating to the public improvement in a manner that would inhibit, chill, or preclude the project.
(2)If an application for a public improvement described in paragraph (1) is submitted to a local government, the local government shall do all of the following:
(A)Consider the application based upon any objective standards specified in any state or local laws that were in effect when the original adaptive reuse project application was submitted.
(B)Conduct its review and approval in the same manner as it would evaluate the public improvement if required by a project that is not eligible to receive ministerial or streamlined approval pursuant to this section.
(3)If an application for a public improvement described in paragraph (1) is submitted to a local government, the local government shall not do either of the following:
(A)Adopt or impose any requirement that applies to a project solely or partially on the basis that the project is eligible to receive ministerial or streamlined approval pursuant to this article.
(B)Unreasonably delay in its consideration, review, or approval of the application.
(c)Nothing in this article shall be interpreted to limit the applicability of Section 65913.3.
65658.10.(a)A local government shall not adopt or impose any requirement, including, but not limited to, increased fees or inclusionary housing requirements, that applies to a project solely or partially on the basis that the project is eligible to receive ministerial or streamlined approval pursuant to this article.
(b)This article shall not affect a project proponents ability to use any alternative streamlined by right permit processing adopted by a local government.
(c)This Notwithstanding a housing developments consistency with the local governments general plan, this article shall not prevent a project from also qualifying as a housing development project entitled to the protections of Section 65589.5.
(d)Alterations to an existing building necessary to comply with local code, the California Building Standards Code, Code (Title 24 of the California Code of Regulations), the International Existing Building Code, Code of the International Code Council, or the California Historical Building Code (Part 8 of Title 24 of the California Code of Regulations) shall not disqualify a qualified adaptive reuse project from the streamlined, ministerial review process established under this article.
65658.11.An adaptive reuse project approved by a local government pursuant to this part shall meet all of the following labor standards:
(a)The development proponent shall require in contracts with construction contractors, and shall certify to the local government, that the standards specified in this section will be met in project construction.
(b)A development that is not in its entirety a public work for purposes of Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of the Labor Code and approved by a local government pursuant to Sections 65658.8 and 65658.9 shall be subject to all of the following:
(1)All construction workers employed in the execution of the development shall be paid at least the general prevailing rate of per diem wages for the type of work and geographic area, as determined by the Director of Industrial Relations pursuant to Sections 1773 and 1773.9 of the Labor Code, except that apprentices registered in programs approved by the Chief of the Division of Apprenticeship Standards may be paid at least the applicable apprentice prevailing rate.
(2)The development proponent shall ensure that the prevailing wage requirement is included in all contracts for the performance of the work for those portions of the development that are not a public work.
(3)All contractors and subcontractors for those portions of the development that are not a public work shall comply with both of the following:
(A)Pay to all construction workers employed in the execution of the work at least the general prevailing rate of per diem wages, except that apprentices registered in programs approved by the Chief of the Division of Apprenticeship Standards may be paid at least the applicable apprentice prevailing rate.
(B)Maintain and verify payroll records pursuant to Section 1776 of the Labor Code and make those records available for inspection and copying as provided in that section. This subparagraph does not apply if all contractors and subcontractors performing work on the development are subject to a project labor agreement that requires the payment of prevailing wages to all construction workers employed in the execution of the development and provides for enforcement of that obligation through an arbitration procedure.
(c)(1)The obligation of the contractors and subcontractors to pay prevailing wages pursuant to this section may be enforced by any of the following:
(A)The Labor Commissioner through the issuance of a civil wage and penalty assessment pursuant to Section 1741 of the Labor Code, which may be reviewed pursuant to Section 1742 of the Labor Code, within 18 months after the completion of the project.
(B)An underpaid worker through an administrative complaint or civil action.
(C)A joint labor-management committee through a civil action under Section 1771.2 of the Labor Code.
(2)If a civil wage and penalty assessment is issued pursuant to this section, the contractor, subcontractor, and surety on a bond or bonds issued to secure the payment of wages covered by the assessment shall be liable for liquidated damages pursuant to Section 1742.1 of the Labor Code.
(3)This subdivision does not apply if all contractors and subcontractors performing work on the development are subject to a project labor agreement that requires the payment of prevailing wages to all construction workers employed in the execution of the development and provides for enforcement of that obligation through an arbitration procedure.
(d)Notwithstanding subdivision (c) of Section 1773.1 of the Labor Code, the requirement that employer payments not reduce the obligation to pay the hourly straight time or overtime wages found to be prevailing does not apply to those portions of development that are not a public work if otherwise provided in a bona fide collective bargaining agreement covering the worker.
(e)The requirement of this section to pay at least the general prevailing rate of per diem wages does not preclude use of an alternative workweek schedule adopted pursuant to Section 511 or 514 of the Labor Code.
(f)For purposes of this section, project labor agreement has the same meaning as set forth in paragraph (1) of subdivision (b) of Section 2500 of the Public Contract Code.
65658.12.In addition to the requirements of Section 65658.11, a development of 50 or more housing units approved by a local government pursuant to this part shall be subject to all of the following:
(a)The development proponent shall require in contracts with construction contractors and shall certify to the local government that each contractor of any tier who will employ construction craft employees or will let subcontracts for at least 1,000 hours shall satisfy the requirements in subdivisions (b) and (c). A construction contractor is deemed in compliance with subdivisions (b) and (c) if it is signatory to a valid collective bargaining agreement that requires utilization of registered apprentices and expenditures on health care for employees and dependents.
(b)A contractor with construction craft employees shall either participate in an apprenticeship program approved by the California Division of Apprenticeship Standards pursuant to Section 3075 of the Labor Code, or request the dispatch of apprentices from a state-approved apprenticeship program under the terms and conditions set forth in Section 1777.5 of the Labor Code. A contractor without construction craft employees shall show a contractual obligation that its subcontractors comply with this subdivision.
(c)Each contractor with construction craft employees shall make health care expenditures for each employee in an amount per hour worked on the development equivalent to at least the hourly pro rata cost of a Covered California Platinum level plan for two 40-year-old adults and two dependents 0 to 14 years of age for the Covered California rating area in which the development is located. A contractor without construction craft employees shall show a contractual obligation that its subcontractors comply with this subdivision. Qualifying expenditures shall be credited toward compliance with prevailing wage payment requirements set forth in Section 65912.130.
(d)(1)The development proponent shall provide to the local government, on a monthly basis while its construction contracts on the development are being performed, a report demonstrating compliance with subdivisions (b) and (c). The reports shall be considered public records under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1), and shall be open to public inspection.
(2)A development proponent that fails to provide the monthly report shall be subject to a civil penalty for each month for which the report has not been provided, in the amount of 10 percent of the dollar value of construction work performed by that contractor on the development in the month in question, up to a maximum of ten thousand dollars ($10,000). Any contractor or subcontractor that fails to comply with subdivision (b) or (c) shall be subject to a civil penalty of two hundred dollars ($200) per day for each worker employed in contravention of subdivision (b) or (c).
(3)Penalties may be assessed by the Labor Commissioner within 18 months of completion of the development using the procedures for issuance of civil wage and penalty assessments specified in Section 1741 of the Labor Code, and may be reviewed pursuant to Section 1742 of the Labor Code. Penalties shall be deposited in the State Public Works Enforcement Fund established pursuant to Section 1771.3 of the Labor Code.
(e)Each construction contractor shall maintain and verify payroll records pursuant to Section 1776 of the Labor Code. Each construction contractor shall submit payroll records directly to the Labor Commissioner at least monthly in a format prescribed by the Labor Commissioner in accordance with subparagraph (A) of paragraph (3) of subdivision (a) of Section 1771.4 of the Labor Code. The records shall include a statement of fringe benefits. Upon request by a joint labor-management cooperation committee established pursuant to the Federal Labor Management Cooperation Act of 1978 (29 U.S.C. Sec. 175a), the records shall be provided pursuant to subdivision (e) of Section 1776 of the Labor Code.
(f)All construction contractors shall report any change in apprenticeship program participation or health care expenditures to the local government within 10 business days, and shall reflect those changes on the monthly report. The reports shall be considered public records pursuant to the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1) and shall be open to public inspection.
(g)A joint labor-management cooperation committee established pursuant to the Federal Labor Management Cooperation Act of 1978 (29 U.S.C. Sec. 175a) shall have standing to sue a construction contractor for failure to make health care expenditures pursuant to subdivision (c) in accordance with Section 218.7 or 218.8 of the Labor Code.
3. Impact Fees 65658.15.(a)Notwithstanding any other law, an adaptive reuse project shall be exempt from all impact fees that are not reasonably related to the impacts resulting from the change of use of the site from nonresidential to residential or mixed use. Any fees charged shall be roughly proportional to the difference in impacts caused by the change of use.
(b)This section shall not apply to any adjacent portion of the project.
SEC. 4.SEC. 5.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act or because costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
It is the intent of the Legislature in enacting this chapter to provide cities and counties with opportunities to adaptively reuse existing buildings, such as office buildings, in order to facilitate their conversion to housing and mixed uses.
51299.1.For purposes of this chapter:
(a)Adaptive reuse investment incentive funds means, with respect to a qualified adaptive reuse project property for a relevant fiscal year, an amount up to or equal to the amount of ad valorem property tax revenue allocated to the participating local agency, excluding the revenue transfers required by Sections 97.2 and 97.3 of the Revenue and Taxation Code, from the taxation of that portion of the total assessed value of the real and personal property of an adaptive reuse project property that is in excess of the qualified adaptive reuse project propertys valuation at the time of the proponents initial request for funding.
(b)Program means an adaptive reuse investment incentive program established pursuant to Section 51299.2.
(c)(1)Proponent means a party or parties that meet all of the following criteria:
(A)The party is named in the application for a permit to construct a qualified adaptive reuse project submitted to the city or county.
(B)The party will be the fee owner of the qualified adaptive reuse project property upon the completion of that development.
(2)If a proponent that is receiving capital investment incentive amounts subsequently leases the qualified adaptive reuse project property to another party, the lease may provide for the payment to that lessee of any portion of adaptive reuse investment incentive funds. A lessee that receives any portion of adaptive reuse investment incentive funds shall also be considered a proponent for the purposes of this chapter.
(d)Qualified adaptive reuse project property means an adaptive reuse project proposed pursuant to Article 11.5 (commencing with Section 65658) of Chapter 3 of Division 1 of Title 7 that is located within the city or county.
51299.2.(a)Commencing in the 202425 fiscal year, the governing body of a city or county may, by ordinance or resolution, establish an adaptive reuse investment incentive program pursuant to this chapter.
(b)(1)A city or county that establishes a program shall, upon the approval by a majority of the entire membership of its governing body of a written request therefor, pay adaptive reuse investment incentive funds to the proponent of a qualified adaptive reuse project property to subsidize the affordable housing units, as required pursuant to Article 11.5 (commencing with Section 65658) of Chapter 3 of Division 1 of Title 7, for up to 15 consecutive fiscal years.
(2)A request for the payment of adaptive reuse investment incentive funds shall be filed by a proponent in writing with the governing body of the city or county in the time and manner established by that governing body.
(c)After a city or county approves a request for the payment of adaptive reuse investment incentive funds, payment of adaptive reuse investment incentive funds shall begin with the first fiscal year that commences after the qualified adaptive reuse property is issued a certificate of occupancy.
51299.3.A city or special district may pay to the city or county an amount equal to the amount of ad valorem property tax revenue allocated to that city or special district, but not the actual allocation, derived from the taxation of that portion of the total assessed value of that real property that is in excess of the propertys valuation at the time of the proponents initial request for funding, for the purpose of subsidizing the affordable housing units required pursuant to Article 11.5 (commencing with Section 65658) of Chapter 3 of Division 1 of Title 7.
SEC. 2.Section 65585 of the Government Code is amended to read:65585.(a)In the preparation of its housing element, each city and county shall consider the guidelines adopted by the department pursuant to Section 50459 of the Health and Safety Code. Those guidelines shall be advisory to each city or county in the preparation of its housing element.
(b)(1)At least 90 days prior to adoption of a revision of its housing element pursuant to subdivision (e) of Section 65588, or at least 60 days prior to the adoption of a subsequent amendment to this element, the planning agency shall submit a draft element revision or draft amendment to the department. The local government of the planning agency shall make the first draft revision of a housing element available for public comment for at least 30 days and, if any comments are received, the local government shall take at least 10 business days after the 30-day public comment period to consider and incorporate public comments into the draft revision prior to submitting it to the department. For any subsequent draft revision, the local government shall post the draft revision on its internet website and shall email a link to the draft revision to all individuals and organizations that have previously requested notices relating to the local governments housing element at least seven days before submitting the draft revision to the department.
(2)The planning agency staff shall collect and compile the public comments regarding the housing element received by the city, county, or city and county and provide these comments to each member of the legislative body before it adopts the housing element.
(3)The department shall review the draft and report its written findings to the planning agency within 90 days of its receipt of the first draft submittal for each housing element revision pursuant to subdivision (e) of Section 65588 or within 60 days of its receipt of a subsequent draft amendment or an adopted revision or adopted amendment to an element. The department shall not review the first draft submitted for each housing element revision pursuant to subdivision (e) of Section 65588 until the local government has made the draft available for public comment for at least 30 days and, if comments were received, has taken at least 10 business days to consider and incorporate public comments pursuant to paragraph (1).
(c)In the preparation of its findings, the department may consult with any public agency, group, or person. The department shall receive and consider any written comments from any public agency, group, or person regarding the draft or adopted element or amendment under review.
(d)In its written findings, the department shall determine whether the draft element or draft amendment substantially complies with this article.
(e)Prior to the adoption of its draft element or draft amendment, the legislative body shall consider the findings made by the department. If the departments findings are not available within the time limits set by this section, the legislative body may act without them.
(f)If the department finds that the draft element or draft amendment does not substantially comply with this article, the legislative body shall take one of the following actions:
(1)Change the draft element or draft amendment to substantially comply with this article.
(2)Adopt the draft element or draft amendment without changes. The legislative body shall include in its resolution of adoption written findings that explain the reasons the legislative body believes that the draft element or draft amendment substantially complies with this article despite the findings of the department.
(g)Promptly following the adoption of its element or amendment, the planning agency shall submit a copy to the department.
(h)The department shall, within 60 days, review adopted housing elements or amendments and report its findings to the planning agency.
(i)(1)(A)The department shall review any action or failure to act by the city, county, or city and county that it determines is inconsistent with an adopted housing element or Section 65583, including any failure to implement any program actions included in the housing element pursuant to Section 65583. The department shall issue written findings to the city, county, or city and county as to whether the action or failure to act substantially complies with this article, and provide a reasonable time no longer than 30 days for the city, county, or city and county to respond to the findings before taking any other action authorized by this section, including the action authorized by subparagraph (B).
(B)If the department finds that the action or failure to act by the city, county, or city and county does not substantially comply with this article, and if it has issued findings pursuant to this section that an amendment to the housing element substantially complies with this article, the department may revoke its findings until it determines that the city, county, or city and county has come into compliance with this article.
(2)The department may consult with any local government, public agency, group, or person, and shall receive and consider any written comments from any public agency, group, or person, regarding the action or failure to act by the city, county, or city and county described in paragraph (1), in determining whether the housing element substantially complies with this article.
(j)The department shall notify the city, county, or city and county and may notify the office of the Attorney General that the city, county, or city and county is in violation of state law if the department finds that the housing element or an amendment to this element, or any action or failure to act described in subdivision (i), does not substantially comply with this article or that any local government has taken an action in violation of the following:
(1)Housing Accountability Act (Section 65589.5).
(2)Section 65863.
(3)Chapter 4.3 (commencing with Section 65915).
(4)Section 65008.
(5)Housing Crisis Act of 2019 (Chapter 654, Statutes of 2019, Sections 65941.1, 65943, and 66300).
(6)Section 8899.50.
(7)Section 65913.4.
(8)Article 11 (commencing with Section 65650).
(9)Article 12 (commencing with Section 65660).
(10)Section 65913.11.
(11)Section 65400.
(12)Section 65863.2.
(13)Chapter 4.1 (commencing with Section 65912.100).
(14)Section 65905.5.
(15)Chapter 13 (commencing with Section 66310).
(16)Section 65852.21.
(17)Section 65852.24.
(18)Section 66411.7.
(19)Section 65913.16.
(20)Article 2 (commencing with Section 66300.5) of Chapter 12.
(21)Section 65852.28.
(22)Section 65913.4.5.
(23)Section 66499.41.
(24)Article 11.5 (commencing with Section 65658).
(k)Commencing July 1, 2019, prior to the Attorney General bringing any suit for a violation of the provisions identified in subdivision (j) related to housing element compliance and seeking remedies available pursuant to this subdivision, the department shall offer the jurisdiction the opportunity for two meetings in person or via telephone to discuss the violation, and shall provide the jurisdiction written findings regarding the violation. This paragraph does not affect any action filed prior to the effective date of this section. The requirements set forth in this subdivision do not apply to any suits brought for a violation or violations of paragraphs (1) and (3) to (9), inclusive, of subdivision (j).
(l)In any action or special proceeding brought by the Attorney General relating to housing element compliance pursuant to a notice or referral under subdivision (j), the Attorney General may request, upon a finding of the court that the housing element does not substantially comply with the requirements of this article pursuant to this section, that the court issue an order or judgment directing the jurisdiction to bring its housing element into substantial compliance with the requirements of this article. The court shall retain jurisdiction to ensure that its order or judgment is carried out. If a court determines that the housing element of the jurisdiction substantially complies with this article, it shall have the same force and effect, for purposes of eligibility for any financial assistance that requires a housing element in substantial compliance and for purposes of any incentives provided under Section 65589.9, as a determination by the department that the housing element substantially complies with this article.
(1)If the jurisdiction has not complied with the order or judgment after 12 months, the court shall conduct a status conference. Following the status conference, upon a determination that the jurisdiction failed to comply with the order or judgment compelling substantial compliance with the requirements of this article, the court shall impose fines on the jurisdiction, which shall be deposited into the Building Homes and Jobs Trust Fund. Any fine levied pursuant to this paragraph shall be in a minimum amount of ten thousand dollars ($10,000) per month, but shall not exceed one hundred thousand dollars ($100,000) per month, except as provided in paragraphs (2) and (3). In the event that the jurisdiction fails to pay fines imposed by the court in full and on time, the court may require the Controller to intercept any available state and local funds and direct such funds to the Building Homes and Jobs Trust Fund to correct the jurisdictions failure to pay. The intercept of the funds by the Controller for this purpose shall not violate any provision of the California Constitution.
(2)If the jurisdiction has not complied with the order or judgment after three months following the imposition of fees described in paragraph (1), the court shall conduct a status conference. Following the status conference, if the court finds that the fees imposed pursuant to paragraph (1) are insufficient to bring the jurisdiction into compliance with the order or judgment, the court may multiply the fine determined pursuant to paragraph (1) by a factor of three. In the event that the jurisdiction fails to pay fines imposed by the court in full and on time, the court may require the Controller to intercept any available state and local funds and direct such funds to the Building Homes and Jobs Trust Fund to correct the jurisdictions failure to pay. The intercept of the funds by the Controller for this purpose shall not violate any provision of the California Constitution.
(3)If the jurisdiction has not complied with the order or judgment six months following the imposition of fees described in paragraph (1), the court shall conduct a status conference. Upon a determination that the jurisdiction failed to comply with the order or judgment, the court may impose the following:
(A)If the court finds that the fees imposed pursuant to paragraphs (1) and (2) are insufficient to bring the jurisdiction into compliance with the order or judgment, the court may multiply the fine determined pursuant to paragraph (1) by a factor of six. In the event that the jurisdiction fails to pay fines imposed by the court in full and on time, the court may require the Controller to intercept any available state and local funds and direct such funds to the Building Homes and Jobs Trust Fund to correct the jurisdictions failure to pay. The intercept of the funds by the Controller for this purpose shall not violate any provision of the California Constitution.
(B)The court may order remedies available pursuant to Section 564 of the Code of Civil Procedure, under which the agent of the court may take all governmental actions necessary to bring the jurisdictions housing element into substantial compliance pursuant to this article in order to remedy identified deficiencies. The court shall determine whether the housing element of the jurisdiction substantially complies with this article and, once the court makes that determination, it shall have the same force and effect, for all purposes, as the departments determination that the housing element substantially complies with this article. An agent appointed pursuant to this paragraph shall have expertise in planning in California.
(4)This subdivision does not limit a courts discretion to apply any and all remedies in an action or special proceeding for a violation of any law identified in subdivision (j).
(m)In determining the application of the remedies available under subdivision (l), the court shall consider whether there are any mitigating circumstances delaying the jurisdiction from coming into compliance with state housing law. The court may consider whether a city, county, or city and county is making a good faith effort to come into substantial compliance or is facing substantial undue hardships.
(n)Nothing in this section shall limit the authority of the office of the Attorney General to bring a suit to enforce state law in an independent capacity. The office of the Attorney General may seek all remedies available under law including those set forth in this section.
(o)Notwithstanding Sections 11040 and 11042, if the Attorney General declines to represent the department in any action or special proceeding brought pursuant to a notice or referral under subdivision (j), the department may appoint or contract with other counsel for purposes of representing the department in the action or special proceeding.
(p)Notwithstanding any other provision of law, the statute of limitations set forth in subdivision (a) of Section 338 of the Code of Civil Procedure shall apply to any action or special proceeding brought by the office of the Attorney General or pursuant to a notice or referral under subdivision (j), or by the department pursuant to subdivision (o).
SEC. 3.Article 11.5 (commencing with Section 65658) is added to Chapter 3 of Division 1 of Title 7 of the Government Code, to read:11.5.Office to Housing Conversion Act1.General Provisions65658.This article may be cited as the Office to Housing Conversion Act.
65658.1.For purposes of this article:
(a)(1)Adaptive reuse reuse project means the retrofitting and repurposing of an existing building to create new residential or mixed uses including office conversion projects.
(2)Adaptive reuse reuse project shall not include the retrofitting and repurposing of any light industrial use, unless the planning director or equivalent position determines that the specific light industrial use is no longer useful for industrial purposes.
(b)Adjacent portion of the project means the portion of the project located on a site adjacent to the proposed repurposed existing building.
(c)Broadly applicable housing affordability requirement means a local ordinance or other regulation that requires a minimum percentage of affordable units and that applies to a variety of housing development types or entitlement pathways.
(d)Impact fee means any fee imposed pursuant to Chapter 5 (commencing with Section 66000).
(e)Historical resource means the same as defined in subdivision (j) of Section 5020.1 of the Public Resources Code, or a resource listed in the California Register of Historical Resources as described in Section 5024.1 of the Public Resources Code.
(f)Light industrial use means a use that is not subject to permitting by a district, as defined in Section 39025 of the Health and Safety Code.
(g)Local affordable housing requirement means either of the following:
(1)A local government requirement that a housing development project include a certain percentage of units affordable to, and occupied by, extremely low, very low, lower, or moderate-income households as a condition of development of residential units.
(2)A local government requirement allowing a housing development project to be a use by right if the project includes a certain percentage of units affordable to, and occupied by, extremely low, very low, lower, or moderate-income households as a condition of development of residential units.
(h)Local government means a city, including a charter city, a county, or a city and county.
(i)Mixed use means residential uses combined with at least one other land use, but not including any industrial use.
(j)Office conversion project means the conversion of a building used for office purposes or a vacant office building into residential dwelling units.
(k)Persons and families of low or moderate income means the same as defined in Section 50093 of the Health and Safety Code.
(l)Phase I environmental assessment means the same as defined in Section 78090 of the Health and Safety Code.
(m)Phase II environmental assessment means the same as defined in Section 25403 of the Health and Safety Code.
(n)Preliminary endangerment assessment means the same as defined in Section 78095 of the Health and Safety Code.
(o)Residential uses includes, but is not limited to, housing units, dormitories, boarding houses, and group housing. Residential uses does not include prisons or jails.
(p)Use by right means that the citys or countys review of the adaptive reuse project may not require a conditional use permit, planned unit development permit, or other discretionary city or county review or approval that would constitute a project for purposes of Division 13 (commencing with Section 21000) of the Public Resources Code. Any subdivision of the sites shall be subject to all laws, including, but not limited to, a city or county ordinance implementing the Subdivision Map Act (Division 2 (commencing with Section 66410)).
65658.3.A local government may adopt an ordinance to implement this article and specify the process and requirements applicable to adaptive reuse projects, provided that the ordinance is consistent with, and does not inhibit the objectives of, this article.
65658.4.The Legislature finds and declares that this article addresses a matter of statewide concern rather than a municipal affair as that term is used in Section 5 of Article XI of the California Constitution. Therefore, this article applies to all cities, including charter cities.
2.Streamlined, Ministerial Approval65658.5.(a)An adaptive reuse project that meets the requirements of subdivision (b) shall be deemed a use by right in all zones, regardless of the zoning of the site, and subject to the streamlined, ministerial review process described in Section 65658.7, except that the nonresidential uses of a proposed mixed-use adaptive reuse project shall be consistent with the land uses allowed by the zoning or a continuation of an existing zoning nonconforming use.
(b)An adaptive reuse project shall comply with all of the following requirements:
(1)The adaptive reuse project and the site on which it is located shall satisfy both of the following:
(A)It is a legal parcel or parcels located in a city if, and only if, the city boundaries include some portion of either an urbanized area or urban cluster, as designated by the United States Census Bureau, or, for unincorporated areas, a legal parcel or parcels wholly within the boundaries of an urbanized area or urban cluster, as designated by the United States Census Bureau.
(B)At least 75 percent of the perimeter of the site adjoins parcels that are developed with urban uses. For the purposes of this section, parcels that are only separated by a street or highway shall be considered to be adjoined.
(2)The adaptive reuse project is proposed for any of the following, as applicable:
(A)The project is proposed for an existing building that is less than 50 years old.
(B)The project is proposed for an existing building that is listed on a local, state, or federal register of historic resources and the adaptive reuse project proponent complies with Section 65658.7.
(C)The project is proposed for an existing building that is more than 50 years old and the local government has evaluated the site through a preliminary application submitted pursuant to subdivision (a) of Section 65658.7 and either of the following are satisfied:
(i)The local government determines that the building or site is a historic resource and the adaptive reuse project proponent complies with Section 65658.7.
(ii)The local government determines that the building or site is not a historic resource.
(3)The adaptive reuse project meets the following affordability criteria, as applicable:
(A)(i)An adaptive reuse project for rental housing shall include either of the following:
(I)Eight percent of the units for very low income households and 5 percent of the units for extremely low income households.
(II)Fifteen percent of the units for lower income households.
(ii)The development proponent shall agree to, and the local government shall ensure, require, the continued affordability of all affordable rental units included pursuant to this subdivision for through a recorded affordability restriction for a period of 55 years. Rents shall be set at an affordable rent, as defined in Section 50053 of the Health and Safety Code.
(B)(i)An adaptive reuse project for owner-occupied housing shall comply with either of the following:
(I)Thirty percent of the units shall be offered at an affordable housing cost, as defined in Section 50052.5 of the Health and Safety Code, to moderate-income households.
(II)Fifteen percent of the units shall be offered at an affordable housing cost, as defined in Section 50052.5 of the Health and Safety Code, to lower income households.
(ii)The development proponent shall agree to, and the local government shall ensure, require, the continued affordability of all affordable ownership units through a recorded affordability restriction for a period of 45 years.
(C)If the local government has a local affordable housing requirement, the housing development project shall comply with all of the following:
(i)The development project shall include the percentage of affordable units required by this section or the local requirement, whichever is higher.
(ii)The development project shall meet the lowest income targeting required by either this section or the local requirement.
(iii)If the local affordable housing requirement requires greater than 15 percent of the units to be dedicated for lower income households and does not require the inclusion of units affordable to very low and extremely low income households, then the rental housing development shall do both of the following:
(I)Include 8 percent of the units for very low income households and 5 percent of the units for extremely low income households.
(II)Fifteen percent of units affordable to lower income households shall be subtracted from the percentage of units required by the local policy at the highest required affordability level.
(D)Affordable units in the development project shall have the same bedroom and bathroom count ratio as the market rate units, be equitably distributed within the project, and have the same type or quality of appliances, fixtures, and finishes.
(4)If the adaptive reuse project includes mixed uses, at least one-half of the square footage of the adaptive reuse project shall be dedicated to residential uses. For purposes of this subparagraph, square footage of the project does not include underground space, including basements or underground parking garages.
(5)(A)The adaptive reuse project proponent completes a Phase I environmental assessment, and a Phase II environmental assessment, if warranted.
(B)If a recognized environmental condition is found, the adaptive reuse project proponent shall undertake a preliminary endangerment assessment prepared by an environmental assessor to determine the existence of any release of a hazardous substance on the site and to determine the potential for exposure of future occupants to significant health hazards from any nearby property or activity.
(i)If a release of hazardous substance is found to exist on the site, prior to occupancy, the project proponent shall agree to remove the release or any significant effect of the release shall be mitigated to a level of insignificance in compliance with state and federal requirements.
(ii)If a potential for exposure to significant hazards from surrounding properties or activities is found to exist, the effects of the potential exposure shall be mitigated to a level of insignificance in compliance with current state and federal requirements.
(6)The adaptive reuse project complies with all objective planning standards found in an ordinance adopted pursuant to Section 65658.3.
(c)An adaptive reuse project that meets all the requirements of subdivision (b) may include rooftop structures that exceed any applicable height limitation imposed by the local government, provided that the rooftop structure does not exceed one story and is used for shared amenities.
65658.6.(a)An adaptive reuse project that satisfies the requirements of Section 65658.5 may include the development of new residential or mixed-use structures on undeveloped areas and parking areas on the parcels adjacent to the proposed adaptive reuse project site if all of the following requirements are met:
(1)The adjacent portion of the project on the site adjacent to the proposed repurposed existing building complies with the requirements of any of the following:
(A)The requirements of paragraph (5) of subdivision (a) of Section 65913.4.
(B)The requirements of the Affordable Housing and High Road Jobs Act of 2022 (Chapter 4.1 (commencing with Section 65912.100)).
(C)The requirements of the Middle Class Housing Act of 2022 (Section 65852.24).
(2)The adjacent portion of the project is located on a parcel that satisfies the requirements specified in subparagraphs (A) and (B) of paragraph (2) of subdivision (a) of Section 65913.4.
(3)The adjacent portion of the project is located on a parcel that satisfies the requirements specified in subparagraphs (B) to (K), inclusive, of paragraph (6) of subdivision (a) of Section 65913.4.
(4)The adjacent portion of the project is located on a parcel that satisfies the requirements specified in paragraph (7) of subdivision (a) of Section 65913.4.
(5)The applicant and local agency comply with the requirements of subdivision (b) of Section 65913.4.
(6)Any existing open space on the proposed project site is not a contributor to a historic resource.
(b)The adjacent portion of the project shall be eligible for a density bonus, incentives or concessions, waivers or reductions of development standards, and parking ratios pursuant to Section 65915.
(c)For purposes of this section, adjacent portion of the project means the portion of the project located on a site adjacent to the proposed repurposed existing building.
65658.7.(a)(1)Before submitting an application for an adaptive reuse project pursuant to Section 65658.5 for a structure that is more than 50 years old and not listed on a local, state, or federal register of historic resources, the development proponent shall submit to the local government a notice of its intent to submit an application. The notice of intent shall be in the form of a preliminary application that includes all of the information described in Section 65941.1.
(2)Upon receipt of a notice of intent to submit an application described in subdivision (a), the local government shall evaluate the project site for historical resources. The local government shall make a historic resource significance determination within 90 days of submission of the notice of intent for purposes of paragraph (1) of subdivision (b) of Section 65658.5.
(b)If the adaptive reuse project is proposed for an existing building that is listed on a local, state, or federal register of historic resources or if the local government has determined that the project site is a significant historic resource pursuant to subdivision (a), the adaptive reuse project proponent shall sign an affidavit declaring that the project will only move forward if it complies with either of the following:
(1)The United States Secretary of the Interiors Standards for Rehabilitation, as found in Part 67 of Title 36 of the Code of Federal Regulations.
(2)The project is awarded federal historic rehabilitation tax credits pursuant to Section 47 of the Internal Revenue Code, or state historic rehabilitation tax credits pursuant to Section 17053.91 or 23691 of the Revenue and Taxation Code.
(c)(1)Notwithstanding subdivision (b), if the adaptive reuse project is proposed for a site that is listed on a local, state, or federal historic register and the adaptive reuse project proponent does not sign an affidavit pursuant to subdivision (b), the local government shall process the adaptive reuse project pursuant to Section 65658.5, but the local government may deny or conditionally approve the project if the local government makes a finding that the project will cause a significant adverse impact to historic resources. A local agency may impose conditions of approval to mitigate impacts to historic resources and to comply with the United States Secretary of the Interiors Standards for Rehabilitation, as found in Part 67 of Title 36 of the Code of Federal Regulations, but shall not impose other conditions of approval.
(2)Review of an adaptive reuse project pursuant to this section shall not constitute a project for purposes of Division 13 (commencing with Section 21000) of the Public Resources Code.
65658.8.(a)(1)Notwithstanding any local law, if a local governments planning director or equivalent position determines that an adaptive reuse project submitted pursuant to this article is consistent with the objective planning standards specified in Section 65658.5 and Section 65658.6, if applicable, the local government shall approve the adaptive reuse project. Upon a determination that an adaptive reuse project submitted pursuant to this section is in conflict with any of the objective planning standards specified in Section 65658.5 or Section 65658.6, if applicable, the local government staff or relevant local planning and permitting department that made the determination shall provide the development proponent written documentation of which standard or standards the development conflicts with, and an explanation for the reason or reasons the development conflicts with that standard or standards, as follows:
(A)Within 60 days of submittal of the adaptive reuse project to the local government pursuant to this section if the project contains 150 or fewer housing units.
(B)Within 90 days of submittal of the adaptive reuse project to the local government pursuant to this section if the project contains more than 150 housing units.
(2)If the local governments planning director or equivalent position fails to provide the required documentation pursuant to paragraph (1), the adaptive reuse project shall be deemed to satisfy the objective planning standards specified in Section 65658.5 and Section 65658.6, if applicable.
(3)For purposes of this section, an adaptive reuse project is consistent with the objective planning standards specified in Section 65658.5 and Section 65658.6, if applicable, if there is substantial evidence that would allow a reasonable person to conclude that the project is consistent with the objective planning standards. The local government shall not determine that an adaptive reuse project, including an application for a modification under subdivision (f), is in conflict with the objective planning standards on the basis that application materials are not included, if the application contains substantial evidence that would allow a reasonable person to conclude that the project is consistent with the objective planning standards.
(4)Upon submittal of an application for streamlined, ministerial approval pursuant to this section to the local government, all departments of the local government that are required to issue an approval of the adaptive reuse project before the granting of an entitlement shall comply with the requirements of this section within the time periods specified in paragraph (1).
(b)(1)Any design review of the adjacent portion of the project may be conducted by the local governments planning commission or any equivalent board or commission responsible for design review. That design review shall be objective and be strictly focused on assessing compliance with criteria required for streamlined projects. That design review shall be completed, and if the project is consistent with all objective standards, the local government shall approve the project as follows and shall not in any way inhibit, chill, or preclude the ministerial approval provided by this article or its effect, as applicable:
(A)Within 90 days of submittal of the adaptive reuse project to the local government pursuant to this section if the project contains 150 or fewer housing units.
(B)Within 180 days of submittal of the qualified adaptive reuse project to the local government pursuant to this section if the project contains more than 150 housing units.
(2)If the adaptive reuse project is consistent with the requirements of Section 65658.5 and Section 65658.6, if applicable, and is consistent with all objective subdivision standards in the local subdivision ordinance, an application for a subdivision pursuant to the Subdivision Map Act (Division 2 (commencing with Section 66410)) shall be exempt from the requirements of the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code) and shall be subject to the public oversight timelines set forth in paragraph (1).
(3)If a local government determines that an adaptive reuse project submitted pursuant to this article is in conflict with any of the standards imposed pursuant to paragraph (1), it shall provide the project proponent written documentation of which objective standard or standards the adaptive reuse project conflicts with, and an explanation for the reason or reasons the project conflicts with, that objective standard or standards consistent with the timelines described in paragraph (1) of subdivision (a).
(c)(1)Notwithstanding any law, a local government, whether or not it has adopted an ordinance governing automobile parking requirements in multifamily developments, shall not impose automobile parking standards for an adjacent portion of the project that was approved pursuant to this article in any of the following instances:
(A)The adjacent portion of the project is located within one-half mile of public transit.
(B)The adjacent portion of the project is located within an architecturally and historically significant historic district.
(C)When on-street parking permits are required but not offered to the occupants of the adjacent portion of the project.
(D)When there is a car share vehicle located within one block of the adjacent portion of the project.
(2)If the adjacent portion of the project does not fall within any of the categories described in paragraph (1), the local government shall not impose automobile parking requirements for the adjacent portion of the project approved pursuant to this article that exceed one parking space per unit.
(d)Notwithstanding any other law, a local government shall not require any of the following prior to approving an adaptive reuse project that meets the requirements of this article:
(1)Studies, information, or other materials that do not pertain directly to determining whether the adaptive reuse project is consistent with the objective planning standards applicable to the development.
(2)(A)Compliance with any standards necessary to receive a postentitlement permit.
(B)This paragraph does not prohibit a local agency from requiring compliance with any standards necessary to receive a postentitlement permit after a permit has been issued pursuant to this section.
(C)For purposes of this paragraph, postentitlement permit has the same meaning as provided in subparagraph (A) of paragraph (3) of subdivision (j) of Section 65913.3.
(e)(1)If a local government approves an adaptive reuse project pursuant to this article, then, notwithstanding any other law, that approval shall not expire if the project satisfies both of the following requirements:
(A)The project includes public investment in housing affordability, beyond tax credits.
(B)At least 20 percent of the units are affordable to households making at or below 80 percent of the area median income.
(2)(A)If a local government approves an adaptive reuse project pursuant to this article, and the project does not satisfy the requirements of subparagraphs (A) and (B) of paragraph (1), that approval shall remain valid for three years from the date of the final action establishing that approval, or if litigation is filed challenging that approval, from the date of the final judgment upholding that approval. Approval shall remain valid for a project provided construction activity, including demolition and grading activity, on the development site has begun pursuant to a permit issued by the local jurisdiction and is in progress. For purposes of this subdivision, in progress means one of the following:
(i)Construction has begun and has not ceased for more than 180 days.
(ii)If the project requires multiple building permits, an initial phase has been completed, and the project proponent has applied for and is diligently pursuing a building permit for a subsequent phase, provided that once it has been issued, the building permit for the subsequent phase does not lapse.
(B)Notwithstanding subparagraph (A), a local government may grant a project a one-time, one-year extension if the project proponent can provide documentation that there has been significant progress toward getting the adaptive reuse project construction ready, such as filing a building permit application.
(3)If the qualified adaptive reuse project proponent requests a modification pursuant to subdivision (f), then the time during which the approval shall remain valid shall be extended for the number of days between the submittal of a modification request and the date of its final approval, plus an additional 180 days to allow time to obtain a building permit. If litigation is filed relating to the modification request, the time shall be further extended during the pendency of the litigation. The extension required by this paragraph shall only apply to the first request for a modification submitted by the development proponent.
(f)(1)(A)A development proponent may request a modification to a qualified adaptive reuse project that has been approved under the streamlined approval process provided in this article if that request is submitted to the local government before the issuance of the final building permit required for construction of the adaptive reuse project.
(B)Except as provided in paragraph (3), the local government shall approve a modification if it determines that the modification is consistent with the objective planning standards specified in subdivision (a) that were in effect when the original adaptive reuse project application was first submitted.
(C)The local government shall evaluate any modifications requested pursuant to this subdivision for consistency with the objective planning standards using the same assumptions and analytical methodology that the local government originally used to assess consistency for the adaptive reuse project that was approved for streamlined, ministerial approval pursuant to subdivision (a).
(2)Upon receipt of the adaptive reuse project proponents application requesting a modification, the local government shall determine if the requested modification is consistent with the objective planning standard and either approve or deny the modification request within 60 days after submission of the modification, or within 90 days if design review is required.
(3)Notwithstanding paragraph (1), the local government may apply objective planning standards to an adjacent portion of the project adopted after the project application was first submitted to the requested modification in any of the following instances:
(A)The adjacent portion of the project is revised such that the total number of residential units or total square footage of construction changes by 15 percent or more. The calculation of the square footage of construction changes shall not include underground space.
(B)The adjacent portion of the project is revised such that the total number of residential units or total square footage of construction changes by 5 percent or more and it is necessary to subject the project to an objective standard beyond those in effect when the project application was submitted in order to mitigate or avoid a specific, adverse impact, as that term is defined in subparagraph (A) of paragraph (1) of subdivision (j) of Section 65589.5, upon the public health or safety and there is no feasible alternative method to satisfactorily mitigate or avoid the adverse impact. The calculation of the square footage of construction changes shall not include underground space.
(C)Objective building standards contained in the California Building Standards Code (Title 24 of the California Code of Regulations), including, but not limited to, building plumbing, electrical, fire, and grading codes, may be applied to all modification applications that are submitted prior to the first building permit application. Those standards may be applied to modification applications submitted after the first building permit application if agreed to by the development proponent.
(4)The local governments review of a modification request pursuant to this subdivision shall be strictly limited to determining whether the modification, including any modification to previously approved density bonus concessions or waivers, modify the projects consistency with the objective planning standards and shall not reconsider prior determinations that are not affected by the modification.
65658.9.(a)A local government shall issue a subsequent permit required for an adaptive reuse project approved under this article if the application substantially complies with the project as it was approved pursuant to Section 65658.8. Upon receipt of an application for a subsequent permit, the local government shall process the permit without unreasonable delay and shall not impose any procedure or requirement that is not imposed on projects that are not approved pursuant to this article. The local government shall consider the application for subsequent permits based upon the applicable objective standards specified in any state or local laws that were in effect when the original adaptive reuse project application was submitted, unless the proponent agrees to a change in objective standards. Issuance of subsequent permits shall implement the approved project, and review of the permit application shall not inhibit, chill, or preclude the adaptive reuse project. For purposes of this paragraph, a subsequent permit means a permit required subsequent to receiving approval under subdivision (a) of Section 65658.8, and includes, but is not limited to, demolition, grading, encroachment, and building permits and final maps, if necessary.
(b)(1)If a public improvement is necessary to implement a project subject to this article, including, but not limited to, a bicycle lane, sidewalk or walkway, public transit stop, driveway, street paving or overlay, a curb or gutter, a modified intersection, a street sign or street light, landscape or hardscape, an aboveground or underground utility connection, a water line, fire hydrant, storm or sanitary sewer connection, retaining wall, and any related work, and that public improvement is located on land owned by the local government, to the extent that the public improvement requires approval from the local government, the local government shall not exercise its discretion over any approval relating to the public improvement in a manner that would inhibit, chill, or preclude the project.
(2)If an application for a public improvement described in paragraph (1) is submitted to a local government, the local government shall do all of the following:
(A)Consider the application based upon any objective standards specified in any state or local laws that were in effect when the original adaptive reuse project application was submitted.
(B)Conduct its review and approval in the same manner as it would evaluate the public improvement if required by a project that is not eligible to receive ministerial or streamlined approval pursuant to this section.
(3)If an application for a public improvement described in paragraph (1) is submitted to a local government, the local government shall not do either of the following:
(A)Adopt or impose any requirement that applies to a project solely or partially on the basis that the project is eligible to receive ministerial or streamlined approval pursuant to this article.
(B)Unreasonably delay in its consideration, review, or approval of the application.
65658.10.(a)A local government shall not adopt or impose any requirement, including, but not limited to, increased fees or inclusionary housing requirements, that applies to a project solely or partially on the basis that the project is eligible to receive ministerial or streamlined approval pursuant to this article.
(b)This article shall not affect a project proponents ability to use any alternative streamlined by right permit processing adopted by a local government.
(c)This article shall not prevent a project from also qualifying as a housing development project entitled to the protections of Section 65589.5.
(d)Alterations to an existing building necessary to comply with the California Building Standards Code, International Existing Building Code, or California Historical Building Code shall not disqualify a qualified adaptive reuse project from the streamlined, ministerial review process established under this article.
65658.11.An adaptive reuse project approved by a local government pursuant to this part shall meet all of the following labor standards:
(a)The development proponent shall require in contracts with construction contractors, and shall certify to the local government, that the standards specified in this section will be met in project construction.
(b)A development that is not in its entirety a public work for purposes of Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of the Labor Code and approved by a local government pursuant to Sections 65658.8 and 65658.9 shall be subject to all of the following:
(1)All construction workers employed in the execution of the development shall be paid at least the general prevailing rate of per diem wages for the type of work and geographic area, as determined by the Director of Industrial Relations pursuant to Sections 1773 and 1773.9 of the Labor Code, except that apprentices registered in programs approved by the Chief of the Division of Apprenticeship Standards may be paid at least the applicable apprentice prevailing rate.
(2)The development proponent shall ensure that the prevailing wage requirement is included in all contracts for the performance of the work for those portions of the development that are not a public work.
(3)All contractors and subcontractors for those portions of the development that are not a public work shall comply with both of the following:
(A)Pay to all construction workers employed in the execution of the work at least the general prevailing rate of per diem wages, except that apprentices registered in programs approved by the Chief of the Division of Apprenticeship Standards may be paid at least the applicable apprentice prevailing rate.
(B)Maintain and verify payroll records pursuant to Section 1776 of the Labor Code and make those records available for inspection and copying as provided in that section. This subparagraph does not apply if all contractors and subcontractors performing work on the development are subject to a project labor agreement that requires the payment of prevailing wages to all construction workers employed in the execution of the development and provides for enforcement of that obligation through an arbitration procedure.
(c)(1)The obligation of the contractors and subcontractors to pay prevailing wages pursuant to this section may be enforced by any of the following:
(A)The Labor Commissioner through the issuance of a civil wage and penalty assessment pursuant to Section 1741 of the Labor Code, which may be reviewed pursuant to Section 1742 of the Labor Code, within 18 months after the completion of the project.
(B)An underpaid worker through an administrative complaint or civil action.
(C)A joint labor-management committee through a civil action under Section 1771.2 of the Labor Code.
(2)If a civil wage and penalty assessment is issued pursuant to this section, the contractor, subcontractor, and surety on a bond or bonds issued to secure the payment of wages covered by the assessment shall be liable for liquidated damages pursuant to Section 1742.1 of the Labor Code.
(3)This subdivision does not apply if all contractors and subcontractors performing work on the development are subject to a project labor agreement that requires the payment of prevailing wages to all construction workers employed in the execution of the development and provides for enforcement of that obligation through an arbitration procedure.
(d)Notwithstanding subdivision (c) of Section 1773.1 of the Labor Code, the requirement that employer payments not reduce the obligation to pay the hourly straight time or overtime wages found to be prevailing does not apply to those portions of development that are not a public work if otherwise provided in a bona fide collective bargaining agreement covering the worker.
(e)The requirement of this section to pay at least the general prevailing rate of per diem wages does not preclude use of an alternative workweek schedule adopted pursuant to Section 511 or 514 of the Labor Code.
(f)For purposes of this section, project labor agreement has the same meaning as set forth in paragraph (1) of subdivision (b) of Section 2500 of the Public Contract Code.
65658.12.In addition to the requirements of Section 65658.11, a development of 50 or more housing units approved by a local government pursuant to this part shall be subject to all of the following:
(a)The development proponent shall require in contracts with construction contractors and shall certify to the local government that each contractor of any tier who will employ construction craft employees or will let subcontracts for at least 1,000 hours shall satisfy the requirements in subdivisions (b) and (c). A construction contractor is deemed in compliance with subdivisions (b) and (c) if it is signatory to a valid collective bargaining agreement that requires utilization of registered apprentices and expenditures on health care for employees and dependents.
(b)A contractor with construction craft employees shall either participate in an apprenticeship program approved by the California Division of Apprenticeship Standards pursuant to Section 3075 of the Labor Code, or request the dispatch of apprentices from a state-approved apprenticeship program under the terms and conditions set forth in Section 1777.5 of the Labor Code. A contractor without construction craft employees shall show a contractual obligation that its subcontractors comply with this subdivision.
(c)Each contractor with construction craft employees shall make health care expenditures for each employee in an amount per hour worked on the development equivalent to at least the hourly pro rata cost of a Covered California Platinum level plan for two 40-year-old adults and two dependents 0 to 14 years of age for the Covered California rating area in which the development is located. A contractor without construction craft employees shall show a contractual obligation that its subcontractors comply with this subdivision. Qualifying expenditures shall be credited toward compliance with prevailing wage payment requirements set forth in Section 65912.130.
(d)(1)The development proponent shall provide to the local government, on a monthly basis while its construction contracts on the development are being performed, a report demonstrating compliance with subdivisions (b) and (c). The reports shall be considered public records under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1), and shall be open to public inspection.
(2)A development proponent that fails to provide the monthly report shall be subject to a civil penalty for each month for which the report has not been provided, in the amount of 10 percent of the dollar value of construction work performed by that contractor on the development in the month in question, up to a maximum of ten thousand dollars ($10,000). Any contractor or subcontractor that fails to comply with subdivision (b) or (c) shall be subject to a civil penalty of two hundred dollars ($200) per day for each worker employed in contravention of subdivision (b) or (c).
(3)Penalties may be assessed by the Labor Commissioner within 18 months of completion of the development using the procedures for issuance of civil wage and penalty assessments specified in Section 1741 of the Labor Code, and may be reviewed pursuant to Section 1742 of the Labor Code. Penalties shall be deposited in the State Public Works Enforcement Fund established pursuant to Section 1771.3 of the Labor Code.
(e)Each construction contractor shall maintain and verify payroll records pursuant to Section 1776 of the Labor Code. Each construction contractor shall submit payroll records directly to the Labor Commissioner at least monthly in a format prescribed by the Labor Commissioner in accordance with subparagraph (A) of paragraph (3) of subdivision (a) of Section 1771.4 of the Labor Code. The records shall include a statement of fringe benefits. Upon request by a joint labor-management cooperation committee established pursuant to the Federal Labor Management Cooperation Act of 1978 (29 U.S.C. Sec. 175a), the records shall be provided pursuant to subdivision (e) of Section 1776 of the Labor Code.
(f)All construction contractors shall report any change in apprenticeship program participation or health care expenditures to the local government within 10 business days, and shall reflect those changes on the monthly report. The reports shall be considered public records pursuant to the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1) and shall be open to public inspection.
(g)A joint labor-management cooperation committee established pursuant to the Federal Labor Management Cooperation Act of 1978 (29 U.S.C. Sec. 175a) shall have standing to sue a construction contractor for failure to make health care expenditures pursuant to subdivision (c) in accordance with Section 218.7 or 218.8 of the Labor Code.
3.Impact Fees65658.15.(a)Notwithstanding any other law, an adaptive reuse project shall be exempt from all impact fees that are not directly reasonably related to the impacts resulting from the change of use of the site from nonresidential to residential or mixed use. Any fees charged shall be roughly proportional to the difference in impacts caused by the change of use.
(b)This section shall not apply to any adjacent portion of the project.
65658.16.Notwithstanding Chapter 5 (commencing with Section 66000), any impact fees imposed on an adaptive reuse project pursuant to this article shall, at the request of the project proponent, be collected on the date the certificate of occupancy is issued.65658.17.(a)An adaptive reuse project proponent that utilizes Section 65658.16 shall be required to execute a contract to pay the fees, or applicable portion thereof, within the time specified.(b)The obligation to pay the fees pursuant to this part shall inure to the benefit of, and be enforceable by, the local government that imposed the fee or charge, regardless of whether it is a party to the contract. The contract shall contain a legal description of the property affected, shall be recorded in the office of the county recorder of the county and, from the date of recordation, shall constitute a lien for the payment of the fees, which shall be enforceable against successors in interest to the property owner or lessee at the time of issuance of the building permit. The contract shall be recorded in the grantor-grantee index in the name of the public agency issuing the building permit as grantee and in the name of the property owner or lessee as grantor. The local government shall record a release of the obligation, containing a legal description of the property, in the event the obligation is paid in full, or a partial release in the event the fee or charge is prorated.(c)The contract executed pursuant to subdivision (a) may require the property owner or lessee to provide appropriate notification of the opening of any escrow for the sale of the property for which the building permit was issued and to provide in the escrow instructions that the fee or charge be paid to the local government imposing the same from the sale proceeds in escrow prior to disbursing proceeds to the seller.SEC. 4.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act or because costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
It is the intent of the Legislature in enacting this chapter to provide cities and counties with opportunities to adaptively reuse existing buildings, such as office buildings, in order to facilitate their conversion to housing and mixed uses.
51298.1.51299.1.For purposes of this chapter:
(a)Adaptive reuse investment incentive funds means, with respect to a qualified adaptive reuse project property for a relevant fiscal year, an amount up to or equal to the amount of ad valorem property tax revenue allocated to the participating local agency, excluding the revenue transfers required by Sections 97.2 and 97.3 of the Revenue and Taxation Code, from the taxation of that portion of the total assessed value of the real and personal property of an adaptive reuse project property that is in excess of the qualified adaptive reuse project propertys valuation at the time of the proponents initial request for funding.
(b)Program means an adaptive reuse investment incentive program established pursuant to Section 51298.2. 51299.2.
(c)(1)Proponent means a party or parties that meet all of the following criteria:
(A)The party is named in the application for a permit to construct a qualified adaptive reuse project submitted to the city or county.
(B)The party will either be the fee owner of the qualified adaptive reuse project property upon the completion of that development or the party enters a sale-leaseback transaction for the qualified adaptive reuse project property. development.
(2)If a proponent that is receiving capital investment incentive amounts subsequently leases the qualified adaptive reuse project property to another party, the lease may provide for the payment to that lessee of any portion of adaptive reuse investment incentive funds. A lessee that receives any portion of adaptive reuse investment incentive funds shall also be considered a proponent for the purposes of this chapter.
(d)Qualified adaptive reuse project property means an adaptive reuse proposed pursuant to Article 11.5 (commencing with Section 65658) of Chapter 3 of Division 1 of Title 7 that is located within the city or county.
51298.2.51299.2.(a)Commencing in the 202425 fiscal year, the governing body of a city or county may, by ordinance or resolution, establish an adaptive reuse investment incentive program pursuant to this chapter.
(b)(1)A city or county that establishes a program shall, upon the approval by a majority of the entire membership of its governing body of a written request therefor, pay adaptive reuse investment incentive funds to the proponent of a qualified adaptive reuse project property to subsidize the affordable housing units, as required pursuant to Article 11.5 (commencing with Section 65658) of Chapter 3 of Division 1 of Title 7, for up to 15 consecutive fiscal years.
(2)A request for the payment of adaptive reuse investment incentive funds shall be filed by a proponent in writing with the governing body of the city or county in the time and manner established by that governing body.
(c)After a city or county approves a request for the payment of adaptive reuse investment incentive funds, payment of adaptive reuse investment incentive funds shall begin with the first fiscal year that commences after the qualified adaptive reuse property is issued a certificate of occupancy.
51298.3.51299.3.A city or special district may pay to the city or county an amount equal to the amount of ad valorem property tax revenue allocated to that city or special district, but not the actual allocation, derived from the taxation of that portion of the total assessed value of that real property that is in excess of the propertys valuation at the time of the proponents initial request for funding. funding, for the purpose of subsidizing the affordable housing units required pursuant to Article 11.5 (commencing with Section 65658) of Chapter 3 of Division 1 of Title 7.
SEC. 2.Section 65585 of the Government Code is amended to read:65585.(a)In the preparation of its housing element, each city and county shall consider the guidelines adopted by the department pursuant to Section 50459 of the Health and Safety Code. Those guidelines shall be advisory to each city or county in the preparation of its housing element.
(b)(1)At least 90 days prior to adoption of a revision of its housing element pursuant to subdivision (e) of Section 65588, or at least 60 days prior to the adoption of a subsequent amendment to this element, the planning agency shall submit a draft element revision or draft amendment to the department. The local government of the planning agency shall make the first draft revision of a housing element available for public comment for at least 30 days and, if any comments are received, the local government shall take at least 10 business days after the 30-day public comment period to consider and incorporate public comments into the draft revision prior to submitting it to the department. For any subsequent draft revision, the local government shall post the draft revision on its internet website and shall email a link to the draft revision to all individuals and organizations that have previously requested notices relating to the local governments housing element at least seven days before submitting the draft revision to the department.
(2)The planning agency staff shall collect and compile the public comments regarding the housing element received by the city, county, or city and county and provide these comments to each member of the legislative body before it adopts the housing element.
(3)The department shall review the draft and report its written findings to the planning agency within 90 days of its receipt of the first draft submittal for each housing element revision pursuant to subdivision (e) of Section 65588 or within 60 days of its receipt of a subsequent draft amendment or an adopted revision or adopted amendment to an element. The department shall not review the first draft submitted for each housing element revision pursuant to subdivision (e) of Section 65588 until the local government has made the draft available for public comment for at least 30 days and, if comments were received, has taken at least 10 business days to consider and incorporate public comments pursuant to paragraph (1).
(c)In the preparation of its findings, the department may consult with any public agency, group, or person. The department shall receive and consider any written comments from any public agency, group, or person regarding the draft or adopted element or amendment under review.
(d)In its written findings, the department shall determine whether the draft element or draft amendment substantially complies with this article.
(e)Prior to the adoption of its draft element or draft amendment, the legislative body shall consider the findings made by the department. If the departments findings are not available within the time limits set by this section, the legislative body may act without them.
(f)If the department finds that the draft element or draft amendment does not substantially comply with this article, the legislative body shall take one of the following actions:
(1)Change the draft element or draft amendment to substantially comply with this article.
(2)Adopt the draft element or draft amendment without changes. The legislative body shall include in its resolution of adoption written findings that explain the reasons the legislative body believes that the draft element or draft amendment substantially complies with this article despite the findings of the department.
(g)Promptly following the adoption of its element or amendment, the planning agency shall submit a copy to the department.
(h)The department shall, within 60 days, review adopted housing elements or amendments and report its findings to the planning agency.
(i)(1)(A)The department shall review any action or failure to act by the city, county, or city and county that it determines is inconsistent with an adopted housing element or Section 65583, including any failure to implement any program actions included in the housing element pursuant to Section 65583. The department shall issue written findings to the city, county, or city and county as to whether the action or failure to act substantially complies with this article, and provide a reasonable time no longer than 30 days for the city, county, or city and county to respond to the findings before taking any other action authorized by this section, including the action authorized by subparagraph (B).
(B)If the department finds that the action or failure to act by the city, county, or city and county does not substantially comply with this article, and if it has issued findings pursuant to this section that an amendment to the housing element substantially complies with this article, the department may revoke its findings until it determines that the city, county, or city and county has come into compliance with this article.
(2)The department may consult with any local government, public agency, group, or person, and shall receive and consider any written comments from any public agency, group, or person, regarding the action or failure to act by the city, county, or city and county described in paragraph (1), in determining whether the housing element substantially complies with this article.
(j)The department shall notify the city, county, or city and county and may notify the office of the Attorney General that the city, county, or city and county is in violation of state law if the department finds that the housing element or an amendment to this element, or any action or failure to act described in subdivision (i), does not substantially comply with this article or that any local government has taken an action in violation of the following:
(1)Housing Accountability Act (Section 65589.5).
(2)Section 65863.
(3)Chapter 4.3 (commencing with Section 65915).
(4)Section 65008.
(5)Housing Crisis Act of 2019 (Chapter 654, Statutes of 2019, Sections 65941.1, 65943, and 66300).
(6)Section 8899.50.
(7)Section 65913.4.
(8)Article 11 (commencing with Section 65650).
(9)Article 12 (commencing with Section 65660).
(10)Section 65913.11.
(11)Section 65400.
(12)Section 65863.2.
(13)Chapter 4.1 (commencing with Section 65912.100).
(14)Section 65905.5.
(15)Chapter 13 (commencing with Section 66310).
(16)Section 65852.21.
(17)Section 65852.24.
(18)Section 66411.7.
(19)Section 65913.16.
(20)Article 2 (commencing with Section 66300.5) of Chapter 12.
(21)Section 65852.28.
(22)Section 65913.4.5.
(23)Section 66499.41.
(24)Article 11.5 (commencing with Section 65658).
(k)Commencing July 1, 2019, prior to the Attorney General bringing any suit for a violation of the provisions identified in subdivision (j) related to housing element compliance and seeking remedies available pursuant to this subdivision, the department shall offer the jurisdiction the opportunity for two meetings in person or via telephone to discuss the violation, and shall provide the jurisdiction written findings regarding the violation. This paragraph does not affect any action filed prior to the effective date of this section. The requirements set forth in this subdivision do not apply to any suits brought for a violation or violations of paragraphs (1) and (3) to (9), inclusive, of subdivision (j).
(l)In any action or special proceeding brought by the Attorney General relating to housing element compliance pursuant to a notice or referral under subdivision (j), the Attorney General may request, upon a finding of the court that the housing element does not substantially comply with the requirements of this article pursuant to this section, that the court issue an order or judgment directing the jurisdiction to bring its housing element into substantial compliance with the requirements of this article. The court shall retain jurisdiction to ensure that its order or judgment is carried out. If a court determines that the housing element of the jurisdiction substantially complies with this article, it shall have the same force and effect, for purposes of eligibility for any financial assistance that requires a housing element in substantial compliance and for purposes of any incentives provided under Section 65589.9, as a determination by the department that the housing element substantially complies with this article.
(1)If the jurisdiction has not complied with the order or judgment after 12 months, the court shall conduct a status conference. Following the status conference, upon a determination that the jurisdiction failed to comply with the order or judgment compelling substantial compliance with the requirements of this article, the court shall impose fines on the jurisdiction, which shall be deposited into the Building Homes and Jobs Trust Fund. Any fine levied pursuant to this paragraph shall be in a minimum amount of ten thousand dollars ($10,000) per month, but shall not exceed one hundred thousand dollars ($100,000) per month, except as provided in paragraphs (2) and (3). In the event that the jurisdiction fails to pay fines imposed by the court in full and on time, the court may require the Controller to intercept any available state and local funds and direct such funds to the Building Homes and Jobs Trust Fund to correct the jurisdictions failure to pay. The intercept of the funds by the Controller for this purpose shall not violate any provision of the California Constitution.
(2)If the jurisdiction has not complied with the order or judgment after three months following the imposition of fees described in paragraph (1), the court shall conduct a status conference. Following the status conference, if the court finds that the fees imposed pursuant to paragraph (1) are insufficient to bring the jurisdiction into compliance with the order or judgment, the court may multiply the fine determined pursuant to paragraph (1) by a factor of three. In the event that the jurisdiction fails to pay fines imposed by the court in full and on time, the court may require the Controller to intercept any available state and local funds and direct such funds to the Building Homes and Jobs Trust Fund to correct the jurisdictions failure to pay. The intercept of the funds by the Controller for this purpose shall not violate any provision of the California Constitution.
(3)If the jurisdiction has not complied with the order or judgment six months following the imposition of fees described in paragraph (1), the court shall conduct a status conference. Upon a determination that the jurisdiction failed to comply with the order or judgment, the court may impose the following:
(A)If the court finds that the fees imposed pursuant to paragraphs (1) and (2) are insufficient to bring the jurisdiction into compliance with the order or judgment, the court may multiply the fine determined pursuant to paragraph (1) by a factor of six. In the event that the jurisdiction fails to pay fines imposed by the court in full and on time, the court may require the Controller to intercept any available state and local funds and direct such funds to the Building Homes and Jobs Trust Fund to correct the jurisdictions failure to pay. The intercept of the funds by the Controller for this purpose shall not violate any provision of the California Constitution.
(B)The court may order remedies available pursuant to Section 564 of the Code of Civil Procedure, under which the agent of the court may take all governmental actions necessary to bring the jurisdictions housing element into substantial compliance pursuant to this article in order to remedy identified deficiencies. The court shall determine whether the housing element of the jurisdiction substantially complies with this article and, once the court makes that determination, it shall have the same force and effect, for all purposes, as the departments determination that the housing element substantially complies with this article. An agent appointed pursuant to this paragraph shall have expertise in planning in California.
(4)This subdivision does not limit a courts discretion to apply any and all remedies in an action or special proceeding for a violation of any law identified in subdivision (j).
(m)In determining the application of the remedies available under subdivision (l), the court shall consider whether there are any mitigating circumstances delaying the jurisdiction from coming into compliance with state housing law. The court may consider whether a city, county, or city and county is making a good faith effort to come into substantial compliance or is facing substantial undue hardships.
(n)Nothing in this section shall limit the authority of the office of the Attorney General to bring a suit to enforce state law in an independent capacity. The office of the Attorney General may seek all remedies available under law including those set forth in this section.
(o)Notwithstanding Sections 11040 and 11042, if the Attorney General declines to represent the department in any action or special proceeding brought pursuant to a notice or referral under subdivision (j), the department may appoint or contract with other counsel for purposes of representing the department in the action or special proceeding.
(p)Notwithstanding any other provision of law, the statute of limitations set forth in subdivision (a) of Section 338 of the Code of Civil Procedure shall apply to any action or special proceeding brought by the office of the Attorney General or pursuant to a notice or referral under subdivision (j), or by the department pursuant to subdivision (o).
SEC. 2.SEC. 3.Article 11.5 (commencing with Section 65658) is added to Chapter 3 of Division 1 of Title 7 of the Government Code, to read:11.5.Office to Housing Conversion Act1.General Provisions65658.This article may be cited as the Office to Housing Conversion Act.
65658.1.For purposes of this article:
(a)(1)Adaptive reuse means the retrofitting and repurposing of an existing building to create new residential or mixed uses including office conversion projects.
(2)Adaptive reuse shall not include the retrofitting and repurposing of any light industrial use, unless the planning director or equivalent position determines that the specific light industrial use is no longer useful for industrial purposes.
(b)Adjacent portion of the project means the portion of the project located on a site adjacent to the proposed repurposed existing building.
(c)Broadly applicable housing affordability requirement means a local ordinance or other regulation that requires a minimum percentage of affordable units and that applies to a variety of housing development types or entitlement pathways.
(d)Impact fee means any fee imposed pursuant to Chapter 5 (commencing with Section 66000).
(e)Historical resource means the same as defined in subdivision (j) of Section 5020.1 of the Public Resources Code, or a resource listed in the California Register of Historical Resources as described in Section 5024.1 of the Public Resources Code.
(f)Light industrial use means a use that is not subject to permitting by a district, as defined in Section 39025 of the Health and Safety Code.
(g)Local affordable housing requirement means either of the following:
(1)A local government requirement that a housing development project include a certain percentage of units affordable to, and occupied by, extremely low, very low, lower, or moderate-income households as a condition of development of residential units.
(2)A local government requirement allowing a housing development project to be a use by right if the project includes a certain percentage of units affordable to, and occupied by, extremely low, very low, lower, or moderate-income households as a condition of development of residential units.
(g)(h)Local government means a city, including a charter city, a county, or a city and county.
(h)(i)Mixed use means residential uses combined with at least one other land use, but not including any industrial use.
(i)(j)Office conversion project means the conversion of a building used for office purposes or a vacant office building into residential dwelling units.
(j)(k)Persons and families of low or moderate income means the same as defined in Section 50093 of the Health and Safety Code.
(k)(l)Phase I environmental assessment means the same as defined in Section 78090 of the Health and Safety Code.
(l)(m)Phase II environmental assessment means the same as defined in Section 25403 of the Health and Safety Code.
(m)(n)Preliminary endangerment assessment means the same as defined in Section 78095 of the Health and Safety Code.
(n)(o)Residential uses includes, but is not limited to, housing units, dormitories, boarding houses, and group housing. Residential uses does not include prisons or jails.
(o)(p)Use by right means that the citys or countys review of the adaptive reuse project may not require a conditional use permit, planned unit development permit, or other discretionary city or county review or approval that would constitute a project for purposes of Division 13 (commencing with Section 21000) of the Public Resources Code. Any subdivision of the sites shall be subject to all laws, including, but not limited to, a city or county ordinance implementing the Subdivision Map Act (Division 2 (commencing with Section 66410)).
65658.3.A local government may adopt an ordinance to implement this article and specify the process and requirements applicable to adaptive reuse projects, provided that the ordinance is consistent with, and does not inhibit the objectives of, this article.
65658.4.The Legislature finds and declares that this article addresses a matter of statewide concern rather than a municipal affair as that term is used in Section 5 of Article XI of the California Constitution. Therefore, this article applies to all cities, including charter cities.
2.Streamlined, Ministerial Approval65658.5.(a)An adaptive reuse project that meets the requirements of subdivision (b) shall be deemed a use by right in all zones, regardless of the zoning of the site, and subject to the streamlined, ministerial review process described in Section 65658.7, except that the nonresidential uses of a proposed mixed-use adaptive reuse project shall be consistent with the land uses allowed by the zoning or a continuation of an existing zoning nonconforming use.
(b)An adaptive reuse project shall comply with all of the following requirements:
(1)The adaptive reuse project and the site on which it is located satisfy both of the following:
(A)It is a legal parcel or parcels located in a city if, and only if, the city boundaries include some portion of either an urbanized area or urban cluster, as designated by the United States Census Bureau, or, for unincorporated areas, a legal parcel or parcels wholly within the boundaries of an urbanized area or urban cluster, as designated by the United States Census Bureau.
(B)At least 75 percent of the perimeter of the site adjoins parcels that are developed with urban uses. For the purposes of this section, parcels that are only separated by a street or highway shall be considered to be adjoined.
(1)(2)The adaptive reuse project is proposed for any of the following, as applicable:
(A)The project is proposed for an existing building that is less than 50 years old.
(B)The project is proposed for an existing building that is listed on a local, state, or federal register of historic resources and the adaptive reuse project proponent complies with Section 65658.7.
(C)The project is proposed for an existing building that is more than 50 years old and the local government has evaluated the site through a preliminary application submitted pursuant to subdivision (a) of Section 65658.7 and either of the following are satisfied:
(i)The local government determines that the building or site is a historic resource and the adaptive reuse project proponent complies with Section 65658.7.
(ii)The local government determines that the building or site is not a historic resource.
(2)The project complies with any broadly applicable housing affordability requirement adopted by the local government. Notwithstanding any other law, a local government shall not impose or enforce any broadly applicable housing affordability requirement on the housing units of an adaptive reuse project that requires the project to restrict more than 10 percent of retrofitted or repurposed units as affordable.(3)The adaptive reuse project meets the following affordability criteria, as applicable:
(A)(i)An adaptive reuse project for rental housing shall include either of the following:
(I)Eight percent of the units for very low income households and 5 percent of the units for extremely low income households.
(II)Fifteen percent of the units for lower income households.
(ii)The development proponent shall agree to, and the local government shall ensure, the continued affordability of all affordable rental units included pursuant to this subdivision for 55 years. Rents shall be set at an affordable rent, as defined in Section 50053 of the Health and Safety Code.
(B)(i)An adaptive reuse project for owner-occupied housing shall comply with either of the following:
(I)Thirty percent of the units shall be offered at an affordable housing cost, as defined in Section 50052.5 of the Health and Safety Code, to moderate-income households.
(II)Fifteen percent of the units shall be offered at an affordable housing cost, as defined in Section 50052.5 of the Health and Safety Code, to lower income households.
(ii)The development proponent shall agree to, and the local government shall ensure, the continued affordability of all affordable ownership units for a period of 45 years.
(C)If the local government has a local affordable housing requirement, the housing development project shall comply with all of the following:
(i)The development project shall include the percentage of affordable units required by this section or the local requirement, whichever is higher.
(ii)The development project shall meet the lowest income targeting required by either this section or the local requirement.
(iii)If the local affordable housing requirement requires greater than 15 percent of the units to be dedicated for lower income households and does not require the inclusion of units affordable to very low and extremely low income households, then the rental housing development shall do both of the following:
(I)Include 8 percent of the units for very low income households and 5 percent of the units for extremely low income households.
(II)Fifteen percent of units affordable to lower income households shall be subtracted from the percentage of units required by the local policy at the highest required affordability level.
(D)Affordable units in the development project shall have the same bedroom and bathroom count ratio as the market rate units, be equitably distributed within the project, and have the same type or quality of appliances, fixtures, and finishes.
(3)(A)(4)If the adaptive reuse project includes mixed uses, at least one-half of the square footage of the adaptive reuse project shall be dedicated to residential uses. For purposes of this subparagraph, square footage of the project does not include underground space, including basements or underground parking garages.
(B)If the adaptive reuse project is also an office conversion project that creates at least one new housing unit, the development proponent may elect for subparagraph (A) to not apply to the project. Both of the following restrictions shall apply to a project subject to this subparagraph:(i)The adaptive reuse project shall not be eligible to include adjacent uses pursuant to Section 65658.6, unless the adjacent uses are separately approved projects that do not utilize the provisions of this article.(ii)The streamlined approval process established pursuant to this article shall apply only to the new housing units created. (4)(5)(A)The adaptive reuse project proponent completes a Phase I environmental assessment, and a Phase II environmental assessment, if warranted.
(B)If a recognized environmental condition is found, the adaptive reuse project proponent shall undertake a preliminary endangerment assessment prepared by an environmental assessor to determine the existence of any release of a hazardous substance on the site and to determine the potential for exposure of future occupants to significant health hazards from any nearby property or activity.
(i)If a release of hazardous substance is found to exist on the site, prior to occupancy, the project proponent shall agree to remove the release or any significant effect of the release shall be mitigated to a level of insignificance in compliance with state and federal requirements.
(ii)If a potential for exposure to significant hazards from surrounding properties or activities is found to exist, the effects of the potential exposure shall be mitigated to a level of insignificance in compliance with current state and federal requirements.
(c)An adaptive reuse project that meets all the requirements of subdivision (b) may include rooftop structures that exceed any applicable height limitation imposed by the local government, provided that the rooftop structure does not exceed one story and is used for shared amenities.
65658.6.(a)An adaptive reuse project that satisfies the requirements of Section 65658.5 may include the development of new residential or mixed-use structures on undeveloped areas and parking areas on the parcels adjacent to the proposed adaptive reuse project site if all of the following requirements are met:
(1)The adjacent portion of the project on the site adjacent to the proposed repurposed existing building complies with the requirements of any of the following:
(A)The requirements of paragraph (5) of subdivision (a) of Section 65913.4.
(B)The requirements of the Affordable Housing and High Road Jobs Act of 2022 (Chapter 4.1 (commencing with Section 65912.100)).
(C)The requirements of the Middle Class Housing Act of 2022 (Section 65852.24).
(2)The adjacent portion of the project is located on a parcel that satisfies the requirements specified in subparagraphs (A) and (B) of paragraph (2) of subdivision (a) of Section 65913.4.
(3)The adjacent portion of the project is located on a parcel that satisfies the requirements specified in subparagraphs (B) to (K), inclusive, of paragraph (6) of subdivision (a) of Section 65913.4.
(4)The adjacent portion of the project is located on a parcel that satisfies the requirements specified in paragraph (7) of subdivision (a) of Section 65913.4.
(5)The applicant and local agency comply with the requirements of subdivision (b) of Section 65913.4.
(6)Any existing open space on the proposed project site is not a contributor to a historic resource.
(b)The adjacent portion of the project shall be eligible for a density bonus, incentives or concessions, waivers or reductions of development standards, and parking ratios pursuant to Section 65915.
(c)For purposes of this section, adjacent portion of the project means the portion of the project located on a site adjacent to the proposed repurposed existing building.
65658.7.(a)(1)Before submitting an application for an adaptive reuse project pursuant to Section 65658.5 for a structure that is more than 50 years old and not listed on a local, state, or federal register of historic resources, the development proponent shall submit to the local government a notice of its intent to submit an application. The notice of intent shall be in the form of a preliminary application that includes all of the information described in Section 65941.1.
(2)Upon receipt of a notice of intent to submit an application described in subdivision (a), the local government shall evaluate the project site for historical resources. The local government shall make a historic resource significance determination within 90 days of submission of the notice of intent for purposes of paragraph (1) of subdivision (b) of Section 65658.5.
(b)If the adaptive reuse project is proposed for an existing building that is listed on a local, state, or federal register of historic resources or if the local government has determined that the project site is a significant historic resource pursuant to subdivision (a), the adaptive reuse project proponent shall sign an affidavit declaring that the project will only move forward if it complies with either of the following:
(1)The United States Secretary of the Interiors Standards for Rehabilitation, as found in Part 67 of Title 36 of the Code of Federal Regulations.
(2)The project is awarded federal historic rehabilitation tax credits pursuant to Section 47 of the Internal Revenue Code, or state historic rehabilitation tax credits pursuant to Section 17053.91 or 23691 of the Revenue and Taxation Code.
(c)(1)Notwithstanding subdivision (b), if the adaptive reuse project is proposed for a site that is listed on a local, state, or federal historic register and the adaptive reuse project proponent does not sign an affidavit pursuant to subdivision (b), the local government shall process the adaptive reuse project pursuant to Section 65658.5, but the local government may deny or conditionally approve the project if the local government makes a finding that the project will cause a significant adverse impact to historic resources. A local agency may impose conditions of approval to mitigate impacts to historic resources and to comply with the United States Secretary of the Interiors Standards for Rehabilitation, as found in Part 67 of Title 36 of the Code of Federal Regulations, but shall not impose other conditions of approval.
(2)Review of an adaptive reuse project pursuant to this section shall not constitute a project for purposes of Division 13 (commencing with Section 21000) of the Public Resources Code.
65658.8.(a)(1)Notwithstanding any local law, if a local governments planning director or equivalent position determines that an adaptive reuse project submitted pursuant to this article is consistent with the objective planning standards specified in Section 65658.5 and Section 65658.6, if applicable, the local government shall approve the adaptive reuse project. Upon a determination that an adaptive reuse project submitted pursuant to this section is in conflict with any of the objective planning standards specified in Section 65658.5 or Section 65658.6, if applicable, the local government staff or relevant local planning and permitting department that made the determination shall provide the development proponent written documentation of which standard or standards the development conflicts with, and an explanation for the reason or reasons the development conflicts with that standard or standards, as follows:
(A)Within 60 days of submittal of the adaptive reuse project to the local government pursuant to this section if the project contains 150 or fewer housing units.
(B)Within 90 days of submittal of the adaptive reuse project to the local government pursuant to this section if the project contains more than 150 housing units.
(2)If the local governments planning director or equivalent position fails to provide the required documentation pursuant to paragraph (1), the adaptive reuse project shall be deemed to satisfy the objective planning standards specified in Section 65658.5 and Section 65658.6, if applicable.
(3)For purposes of this section, an adaptive reuse project is consistent with the objective planning standards specified in Section 65658.5 and Section 65658.6, if applicable, if there is substantial evidence that would allow a reasonable person to conclude that the project is consistent with the objective planning standards. The local government shall not determine that an adaptive reuse project, including an application for a modification under subdivision (f), is in conflict with the objective planning standards on the basis that application materials are not included, if the application contains substantial evidence that would allow a reasonable person to conclude that the project is consistent with the objective planning standards.
(4)Upon submittal of an application for streamlined, ministerial approval pursuant to this section to the local government, all departments of the local government that are required to issue an approval of the adaptive reuse project before the granting of an entitlement shall comply with the requirements of this section within the time periods specified in paragraph (1).
(b)(1)Any design review of the adjacent portion of the project may be conducted by the local governments planning commission or any equivalent board or commission responsible for design review. That design review shall be objective and be strictly focused on assessing compliance with criteria required for streamlined projects. That design review shall be completed, and if the project is consistent with all objective standards, the local government shall approve the project as follows and shall not in any way inhibit, chill, or preclude the ministerial approval provided by this article or its effect, as applicable:
(A)Within 90 days of submittal of the adaptive reuse project to the local government pursuant to this section if the project contains 150 or fewer housing units.
(B)Within 180 days of submittal of the qualified adaptive reuse project to the local government pursuant to this section if the project contains more than 150 housing units.
(2)If the adaptive reuse project is consistent with the requirements of Section 65658.5 and Section 65658.6, if applicable, and is consistent with all objective subdivision standards in the local subdivision ordinance, an application for a subdivision pursuant to the Subdivision Map Act (Division 2 (commencing with Section 66410)) shall be exempt from the requirements of the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code) and shall be subject to the public oversight timelines set forth in paragraph (1).
(3)If a local government determines that an adaptive reuse project submitted pursuant to this article is in conflict with any of the standards imposed pursuant to paragraph (1), it shall provide the project proponent written documentation of which objective standard or standards the adaptive reuse project conflicts with, and an explanation for the reason or reasons the project conflicts with with, that objective standard or standards consistent with the timelines described in paragraph (1) of subdivision (a).
(c)(1)Notwithstanding any law, a local government, whether or not it has adopted an ordinance governing automobile parking requirements in multifamily developments, shall not impose automobile parking standards for an adjacent portion of the project that was approved pursuant to this article in any of the following instances:
(A)The adjacent portion of the project is located within one-half mile of public transit.
(B)The adjacent portion of the project is located within an architecturally and historically significant historic district.
(C)When on-street parking permits are required but not offered to the occupants of the adjacent portion of the project.
(D)When there is a car share vehicle located within one block of the adjacent portion of the project.
(2)If the adjacent portion of the project does not fall within any of the categories described in paragraph (1), the local government shall not impose automobile parking requirements for the adjacent portion of the project approved pursuant to this article that exceed one parking space per unit.
(d)Notwithstanding any other law, a local government shall not require any of the following prior to approving an adaptive reuse project that meets the requirements of this article:
(1)Studies, information, or other materials that do not pertain directly to determining whether the adaptive reuse project is consistent with the objective planning standards applicable to the development.
(2)(A)Compliance with any standards necessary to receive a postentitlement permit.
(B)This paragraph does not prohibit a local agency from requiring compliance with any standards necessary to receive a postentitlement permit after a permit has been issued pursuant to this section.
(C)For purposes of this paragraph, postentitlement permit has the same meaning as provided in subparagraph (A) of paragraph (3) of subdivision (j) of Section 65913.3.
(e)(1)If a local government approves an adaptive reuse project pursuant to this article, then, notwithstanding any other law, that approval shall not expire if the project satisfies both of the following requirements:
(A)The project includes public investment in housing affordability, beyond tax credits.
(B)At least 20 percent of the units are affordable to households making at or below 80 percent of the area median income.
(2)(A)If a local government approves an adaptive reuse project pursuant to this article, and the project does not satisfy the requirements of subparagraphs (A) and (B) of paragraph (1), that approval shall remain valid for three years from the date of the final action establishing that approval, or if litigation is filed challenging that approval, from the date of the final judgment upholding that approval. Approval shall remain valid for a project provided construction activity, including demolition and grading activity, on the development site has begun pursuant to a permit issued by the local jurisdiction and is in progress. For purposes of this subdivision, in progress means one of the following:
(i)Construction has begun and has not ceased for more than 180 days.
(ii)If the project requires multiple building permits, an initial phase has been completed, and the project proponent has applied for and is diligently pursuing a building permit for a subsequent phase, provided that once it has been issued, the building permit for the subsequent phase does not lapse.
(B)Notwithstanding subparagraph (A), a local government may grant a project a one-time, one-year extension if the project proponent can provide documentation that there has been significant progress toward getting the adaptive reuse project construction ready, such as filing a building permit application.
(3)If the qualified adaptive reuse project proponent requests a modification pursuant to subdivision (f), then the time during which the approval shall remain valid shall be extended for the number of days between the submittal of a modification request and the date of its final approval, plus an additional 180 days to allow time to obtain a building permit. If litigation is filed relating to the modification request, the time shall be further extended during the pendency of the litigation. The extension required by this paragraph shall only apply to the first request for a modification submitted by the development proponent.
(f)(1)(A)A development proponent may request a modification to a qualified adaptive reuse project that has been approved under the streamlined approval process provided in this article if that request is submitted to the local government before the issuance of the final building permit required for construction of the adaptive reuse project.
(B)Except as provided in paragraph (3), the local government shall approve a modification if it determines that the modification is consistent with the objective planning standards specified in subdivision (a) that were in effect when the original adaptive reuse project application was first submitted.
(C)The local government shall evaluate any modifications requested pursuant to this subdivision for consistency with the objective planning standards using the same assumptions and analytical methodology that the local government originally used to assess consistency for the adaptive reuse project that was approved for streamlined, ministerial approval pursuant to subdivision (a).
(2)Upon receipt of the adaptive reuse project proponents application requesting a modification, the local government shall determine if the requested modification is consistent with the objective planning standard and either approve or deny the modification request within 60 days after submission of the modification, or within 90 days if design review is required.
(3)Notwithstanding paragraph (1), the local government may apply objective planning standards to an adjacent portion of the project adopted after the project application was first submitted to the requested modification in any of the following instances:
(A)The adjacent portion of the project is revised such that the total number of residential units or total square footage of construction changes by 15 percent or more. The calculation of the square footage of construction changes shall not include underground space.
(B)The adjacent portion of the project is revised such that the total number of residential units or total square footage of construction changes by 5 percent or more and it is necessary to subject the project to an objective standard beyond those in effect when the project application was submitted in order to mitigate or avoid a specific, adverse impact, as that term is defined in subparagraph (A) of paragraph (1) of subdivision (j) of Section 65589.5, upon the public health or safety and there is no feasible alternative method to satisfactorily mitigate or avoid the adverse impact. The calculation of the square footage of construction changes shall not include underground space.
(C)Objective building standards contained in the California Building Standards Code (Title 24 of the California Code of Regulations), including, but not limited to, building plumbing, electrical, fire, and grading codes, may be applied to all modification applications that are submitted prior to the first building permit application. Those standards may be applied to modification applications submitted after the first building permit application if agreed to by the development proponent.
(4)The local governments review of a modification request pursuant to this subdivision shall be strictly limited to determining whether the modification, including any modification to previously approved density bonus concessions or waivers, modify the projects consistency with the objective planning standards and shall not reconsider prior determinations that are not affected by the modification.
65658.9.(a)A local government shall issue a subsequent permit required for an adaptive reuse project approved under this article if the application substantially complies with the project as it was approved pursuant to Section 65658.8. Upon receipt of an application for a subsequent permit, the local government shall process the permit without unreasonable delay and shall not impose any procedure or requirement that is not imposed on projects that are not approved pursuant to this article. The local government shall consider the application for subsequent permits based upon the applicable objective standards specified in any state or local laws that were in effect when the original adaptive reuse project application was submitted, unless the proponent agrees to a change in objective standards. Issuance of subsequent permits shall implement the approved project, and review of the permit application shall not inhibit, chill, or preclude the adaptive reuse project. For purposes of this paragraph, a subsequent permit means a permit required subsequent to receiving approval under subdivision (a) of Section 65658.8, and includes, but is not limited to, demolition, grading, encroachment, and building permits and final maps, if necessary.
(b)(1)If a public improvement is necessary to implement a project subject to this article, including, but not limited to, a bicycle lane, sidewalk or walkway, public transit stop, driveway, street paving or overlay, a curb or gutter, a modified intersection, a street sign or street light, landscape or hardscape, an above-ground aboveground or underground utility connection, a water line, fire hydrant, storm or sanitary sewer connection, retaining wall, and any related work, and that public improvement is located on land owned by the local government, to the extent that the public improvement requires approval from the local government, the local government shall not exercise its discretion over any approval relating to the public improvement in a manner that would inhibit, chill, or preclude the project.
(2)If an application for a public improvement described in paragraph (1) is submitted to a local government, the local government shall do all of the following:
(A)Consider the application based upon any objective standards specified in any state or local laws that were in effect when the original adaptive reuse project application was submitted.
(B)Conduct its review and approval in the same manner as it would evaluate the public improvement if required by a project that is not eligible to receive ministerial or streamlined approval pursuant to this section.
(3)If an application for a public improvement described in paragraph (1) is submitted to a local government, the local government shall not do either of the following:
(A)Adopt or impose any requirement that applies to a project solely or partially on the basis that the project is eligible to receive ministerial or streamlined approval pursuant to this article.
(B)Unreasonably delay in its consideration, review, or approval of the application.
65658.10.(a)A local government shall not adopt or impose any requirement, including, but not limited to, increased fees or inclusionary housing requirements, that applies to a project solely or partially on the basis that the project is eligible to receive ministerial or streamlined approval pursuant to this article.
(b)This article shall not affect a project proponents ability to use any alternative streamlined by right permit processing adopted by a local government.
(c)This article shall not prevent a project from also qualifying as a housing development project entitled to the protections of Section 65589.5.
(d)Alterations to an existing building necessary to comply with the California Building Standards Code, International Existing Building Code, or California Historical Building Code shall not disqualify a qualified adaptive reuse project from the streamlined, ministerial review process established under this article.
65658.11.An adaptive reuse project approved by a local government pursuant to this part shall meet all of the following labor standards:
(a)The development proponent shall require in contracts with construction contractors, and shall certify to the local government, that the standards specified in this section will be met in project construction.
(b)A development that is not in its entirety a public work for purposes of Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of the Labor Code and approved by a local government pursuant to Sections 65658.8 and 65658.9 shall be subject to all of the following:
(1)All construction workers employed in the execution of the development shall be paid at least the general prevailing rate of per diem wages for the type of work and geographic area, as determined by the Director of Industrial Relations pursuant to Sections 1773 and 1773.9 of the Labor Code, except that apprentices registered in programs approved by the Chief of the Division of Apprenticeship Standards may be paid at least the applicable apprentice prevailing rate.
(2)The development proponent shall ensure that the prevailing wage requirement is included in all contracts for the performance of the work for those portions of the development that are not a public work.
(3)All contractors and subcontractors for those portions of the development that are not a public work shall comply with both of the following:
(A)Pay to all construction workers employed in the execution of the work at least the general prevailing rate of per diem wages, except that apprentices registered in programs approved by the Chief of the Division of Apprenticeship Standards may be paid at least the applicable apprentice prevailing rate.
(B)Maintain and verify payroll records pursuant to Section 1776 of the Labor Code and make those records available for inspection and copying as provided in that section. This subparagraph does not apply if all contractors and subcontractors performing work on the development are subject to a project labor agreement that requires the payment of prevailing wages to all construction workers employed in the execution of the development and provides for enforcement of that obligation through an arbitration procedure.
(c)(1)The obligation of the contractors and subcontractors to pay prevailing wages pursuant to this section may be enforced by any of the following:
(A)The Labor Commissioner through the issuance of a civil wage and penalty assessment pursuant to Section 1741 of the Labor Code, which may be reviewed pursuant to Section 1742 of the Labor Code, within 18 months after the completion of the project.
(B)An underpaid worker through an administrative complaint or civil action.
(C)A joint labor-management committee through a civil action under Section 1771.2 of the Labor Code.
(2)If a civil wage and penalty assessment is issued pursuant to this section, the contractor, subcontractor, and surety on a bond or bonds issued to secure the payment of wages covered by the assessment shall be liable for liquidated damages pursuant to Section 1742.1 of the Labor Code.
(3)This subdivision does not apply if all contractors and subcontractors performing work on the development are subject to a project labor agreement that requires the payment of prevailing wages to all construction workers employed in the execution of the development and provides for enforcement of that obligation through an arbitration procedure.
(d)Notwithstanding subdivision (c) of Section 1773.1 of the Labor Code, the requirement that employer payments not reduce the obligation to pay the hourly straight time or overtime wages found to be prevailing does not apply to those portions of development that are not a public work if otherwise provided in a bona fide collective bargaining agreement covering the worker.
(e)The requirement of this section to pay at least the general prevailing rate of per diem wages does not preclude use of an alternative workweek schedule adopted pursuant to Section 511 or 514 of the Labor Code.
(f)For purposes of this section, project labor agreement has the same meaning as set forth in paragraph (1) of subdivision (b) of Section 2500 of the Public Contract Code.
65658.12.In addition to the requirements of Section 65658.11, a development of 50 or more housing units approved by a local government pursuant to this part shall be subject to all of the following:
(a)The development proponent shall require in contracts with construction contractors and shall certify to the local government that each contractor of any tier who will employ construction craft employees or will let subcontracts for at least 1,000 hours shall satisfy the requirements in subdivisions (b) and (c). A construction contractor is deemed in compliance with subdivisions (b) and (c) if it is signatory to a valid collective bargaining agreement that requires utilization of registered apprentices and expenditures on health care for employees and dependents.
(b)A contractor with construction craft employees shall either participate in an apprenticeship program approved by the California Division of Apprenticeship Standards pursuant to Section 3075 of the Labor Code, or request the dispatch of apprentices from a state-approved apprenticeship program under the terms and conditions set forth in Section 1777.5 of the Labor Code. A contractor without construction craft employees shall show a contractual obligation that its subcontractors comply with this subdivision.
(c)Each contractor with construction craft employees shall make health care expenditures for each employee in an amount per hour worked on the development equivalent to at least the hourly pro rata cost of a Covered California Platinum level plan for two 40-year-old adults and two dependents 0 to 14 years of age for the Covered California rating area in which the development is located. A contractor without construction craft employees shall show a contractual obligation that its subcontractors comply with this subdivision. Qualifying expenditures shall be credited toward compliance with prevailing wage payment requirements set forth in Section 65912.130.
(d)(1)The development proponent shall provide to the local government, on a monthly basis while its construction contracts on the development are being performed, a report demonstrating compliance with subdivisions (b) and (c). The reports shall be considered public records under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1), and shall be open to public inspection.
(2)A development proponent that fails to provide the monthly report shall be subject to a civil penalty for each month for which the report has not been provided, in the amount of 10 percent of the dollar value of construction work performed by that contractor on the development in the month in question, up to a maximum of ten thousand dollars ($10,000). Any contractor or subcontractor that fails to comply with subdivision (b) or (c) shall be subject to a civil penalty of two hundred dollars ($200) per day for each worker employed in contravention of subdivision (b) or (c).
(3)Penalties may be assessed by the Labor Commissioner within 18 months of completion of the development using the procedures for issuance of civil wage and penalty assessments specified in Section 1741 of the Labor Code, and may be reviewed pursuant to Section 1742 of the Labor Code. Penalties shall be deposited in the State Public Works Enforcement Fund established pursuant to Section 1771.3 of the Labor Code.
(e)Each construction contractor shall maintain and verify payroll records pursuant to Section 1776 of the Labor Code. Each construction contractor shall submit payroll records directly to the Labor Commissioner at least monthly in a format prescribed by the Labor Commissioner in accordance with subparagraph (A) of paragraph (3) of subdivision (a) of Section 1771.4 of the Labor Code. The records shall include a statement of fringe benefits. Upon request by a joint labor-management cooperation committee established pursuant to the Federal Labor Management Cooperation Act of 1978 (29 U.S.C. Sec. 175a), the records shall be provided pursuant to subdivision (e) of Section 1776 of the Labor Code.
(f)All construction contractors shall report any change in apprenticeship program participation or health care expenditures to the local government within 10 business days, and shall reflect those changes on the monthly report. The reports shall be considered public records pursuant to the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1) and shall be open to public inspection.
(g)A joint labor-management cooperation committee established pursuant to the Federal Labor Management Cooperation Act of 1978 (29 U.S.C. Sec. 175a) shall have standing to sue a construction contractor for failure to make health care expenditures pursuant to subdivision (c) in accordance with Section 218.7 or 218.8 of the Labor Code.
3.Impact Fees65658.15.(a)Notwithstanding any other law, an adaptive reuse project shall be exempt from all impact fees that are not directly related to the impacts resulting from the change of use of the site from nonresidential to residential or mixed use. Any fees charged shall be proportional to the difference in impacts caused by the change of use.
(b)This section shall not apply to any adjacent portion of the project.
65658.16.Notwithstanding Chapter 5 (commencing with Section 66000), any impact fees imposed on an adaptive reuse project pursuant to this article shall, at the request of the project proponent, be collected on the date the certificate of occupancy is issued.
65658.17.(a)An adaptive reuse project proponent that utilizes Section 65658.16 shall be required to execute a contract to pay the fees, or applicable portion thereof, within the time specified.
(b)The obligation to pay the fees pursuant to this part shall inure to the benefit of, and be enforceable by, the local government that imposed the fee or charge, regardless of whether it is a party to the contract. The contract shall contain a legal description of the property affected, shall be recorded in the office of the county recorder of the county and, from the date of recordation, shall constitute a lien for the payment of the fees, which shall be enforceable against successors in interest to the property owner or lessee at the time of issuance of the building permit. The contract shall be recorded in the grantor-grantee index in the name of the public agency issuing the building permit as grantee and in the name of the property owner or lessee as grantor. The local government shall record a release of the obligation, containing a legal description of the property, in the event the obligation is paid in full, or a partial release in the event the fee or charge is prorated.
(c)The contract executed pursuant to subdivision (a) may require the property owner or lessee to provide appropriate notification of the opening of any escrow for the sale of the property for which the building permit was issued and to provide in the escrow instructions that the fee or charge be paid to the local government imposing the same from the sale proceeds in escrow prior to disbursing proceeds to the seller.
SEC. 3.Section 65585 of the Government Code is amended to read:65585.(a)In the preparation of its housing element, each city and county shall consider the guidelines adopted by the department pursuant to Section 50459 of the Health and Safety Code. Those guidelines shall be advisory to each city or county in the preparation of its housing element.(b)(1)At least 90 days prior to adoption of a revision of its housing element pursuant to subdivision (e) of Section 65588, or at least 60 days prior to the adoption of a subsequent amendment to this element, the planning agency shall submit a draft element revision or draft amendment to the department. The local government of the planning agency shall make the first draft revision of a housing element available for public comment for at least 30 days and, if any comments are received, the local government shall take at least 10 business days after the 30-day public comment period to consider and incorporate public comments into the draft revision prior to submitting it to the department. For any subsequent draft revision, the local government shall post the draft revision on its internet website and shall email a link to the draft revision to all individuals and organizations that have previously requested notices relating to the local governments housing element at least seven days before submitting the draft revision to the department.(2)The planning agency staff shall collect and compile the public comments regarding the housing element received by the city, county, or city and county and provide these comments to each member of the legislative body before it adopts the housing element.(3)The department shall review the draft and report its written findings to the planning agency within 90 days of its receipt of the first draft submittal for each housing element revision pursuant to subdivision (e) of Section 65588 or within 60 days of its receipt of a subsequent draft amendment or an adopted revision or adopted amendment to an element. The department shall not review the first draft submitted for each housing element revision pursuant to subdivision (e) of Section 65588 until the local government has made the draft available for public comment for at least 30 days and, if comments were received, has taken at least 10 business days to consider and incorporate public comments pursuant to paragraph (1).(c)In the preparation of its findings, the department may consult with any public agency, group, or person. The department shall receive and consider any written comments from any public agency, group, or person regarding the draft or adopted element or amendment under review.(d)In its written findings, the department shall determine whether the draft element or draft amendment substantially complies with this article.(e)Prior to the adoption of its draft element or draft amendment, the legislative body shall consider the findings made by the department. If the departments findings are not available within the time limits set by this section, the legislative body may act without them.(f)If the department finds that the draft element or draft amendment does not substantially comply with this article, the legislative body shall take one of the following actions:(1)Change the draft element or draft amendment to substantially comply with this article.(2)Adopt the draft element or draft amendment without changes. The legislative body shall include in its resolution of adoption written findings that explain the reasons the legislative body believes that the draft element or draft amendment substantially complies with this article despite the findings of the department.(g)Promptly following the adoption of its element or amendment, the planning agency shall submit a copy to the department.(h)The department shall, within 60 days, review adopted housing elements or amendments and report its findings to the planning agency.(i)(1)(A)The department shall review any action or failure to act by the city, county, or city and county that it determines is inconsistent with an adopted housing element or Section 65583, including any failure to implement any program actions included in the housing element pursuant to Section 65583. The department shall issue written findings to the city, county, or city and county as to whether the action or failure to act substantially complies with this article, and provide a reasonable time no longer than 30 days for the city, county, or city and county to respond to the findings before taking any other action authorized by this section, including the action authorized by subparagraph (B).(B)If the department finds that the action or failure to act by the city, county, or city and county does not substantially comply with this article, and if it has issued findings pursuant to this section that an amendment to the housing element substantially complies with this article, the department may revoke its findings until it determines that the city, county, or city and county has come into compliance with this article.(2)The department may consult with any local government, public agency, group, or person, and shall receive and consider any written comments from any public agency, group, or person, regarding the action or failure to act by the city, county, or city and county described in paragraph (1), in determining whether the housing element substantially complies with this article.(j)The department shall notify the city, county, or city and county and may notify the office of the Attorney General that the city, county, or city and county is in violation of state law if the department finds that the housing element or an amendment to this element, or any action or failure to act described in subdivision (i), does not substantially comply with this article or that any local government has taken an action in violation of the following:(1)Housing Accountability Act (Section 65589.5).(2)Section 65863.(3)Chapter 4.3 (commencing with Section 65915).(4)Section 65008.(5)Housing Crisis Act of 2019 (Chapter 654, Statutes of 2019, Sections 65941.1, 65943, and 66300).(6)Section 8899.50.(7)Section 65913.4.(8)Article 11 (commencing with Section 65650).(9)Article 12 (commencing with Section 65660).(10)Section 65913.11.(11)Section 65400.(12)Section 65863.2.(13)Chapter 4.1 (commencing with Section 65912.100).(14)Section 65905.5.(15)Section 65852.2.(16)Section 65852.21.(17)Section 65852.22.(18)Section 65852.23.(19)Section 65852.24.(20)Section 65852.26.(21)Section 66411.7.(22)Section 65913.16.(23)Article 2 (commencing with Section 66300.5) of Chapter 12.(24)Section 65852.28.(25)Section 65913.4.5.(26)Section 66499.41.(27)Article 11.5 (commencing with Section 65658).(k)Commencing July 1, 2019, prior to the Attorney General bringing any suit for a violation of the provisions identified in subdivision (j) related to housing element compliance and seeking remedies available pursuant to this subdivision, the department shall offer the jurisdiction the opportunity for two meetings in person or via telephone to discuss the violation, and shall provide the jurisdiction written findings regarding the violation. This paragraph does not affect any action filed prior to the effective date of this section. The requirements set forth in this subdivision do not apply to any suits brought for a violation or violations of paragraphs (1) and (3) to (9), inclusive, of subdivision (j).(l)In any action or special proceeding brought by the Attorney General relating to housing element compliance pursuant to a notice or referral under subdivision (j), the Attorney General may request, upon a finding of the court that the housing element does not substantially comply with the requirements of this article pursuant to this section, that the court issue an order or judgment directing the jurisdiction to bring its housing element into substantial compliance with the requirements of this article. The court shall retain jurisdiction to ensure that its order or judgment is carried out. If a court determines that the housing element of the jurisdiction substantially complies with this article, it shall have the same force and effect, for purposes of eligibility for any financial assistance that requires a housing element in substantial compliance and for purposes of any incentives provided under Section 65589.9, as a determination by the department that the housing element substantially complies with this article.(1)If the jurisdiction has not complied with the order or judgment after 12 months, the court shall conduct a status conference. Following the status conference, upon a determination that the jurisdiction failed to comply with the order or judgment compelling substantial compliance with the requirements of this article, the court shall impose fines on the jurisdiction, which shall be deposited into the Building Homes and Jobs Trust Fund. Any fine levied pursuant to this paragraph shall be in a minimum amount of ten thousand dollars ($10,000) per month, but shall not exceed one hundred thousand dollars ($100,000) per month, except as provided in paragraphs (2) and (3). In the event that the jurisdiction fails to pay fines imposed by the court in full and on time, the court may require the Controller to intercept any available state and local funds and direct such funds to the Building Homes and Jobs Trust Fund to correct the jurisdictions failure to pay. The intercept of the funds by the Controller for this purpose shall not violate any provision of the California Constitution.(2)If the jurisdiction has not complied with the order or judgment after three months following the imposition of fees described in paragraph (1), the court shall conduct a status conference. Following the status conference, if the court finds that the fees imposed pursuant to paragraph (1) are insufficient to bring the jurisdiction into compliance with the order or judgment, the court may multiply the fine determined pursuant to paragraph (1) by a factor of three. In the event that the jurisdiction fails to pay fines imposed by the court in full and on time, the court may require the Controller to intercept any available state and local funds and direct such funds to the Building Homes and Jobs Trust Fund to correct the jurisdictions failure to pay. The intercept of the funds by the Controller for this purpose shall not violate any provision of the California Constitution.(3)If the jurisdiction has not complied with the order or judgment six months following the imposition of fees described in paragraph (1), the court shall conduct a status conference. Upon a determination that the jurisdiction failed to comply with the order or judgment, the court may impose the following:(A)If the court finds that the fees imposed pursuant to paragraphs (1) and (2) are insufficient to bring the jurisdiction into compliance with the order or judgment, the court may multiply the fine determined pursuant to paragraph (1) by a factor of six. In the event that the jurisdiction fails to pay fines imposed by the court in full and on time, the court may require the Controller to intercept any available state and local funds and direct such funds to the Building Homes and Jobs Trust Fund to correct the jurisdictions failure to pay. The intercept of the funds by the Controller for this purpose shall not violate any provision of the California Constitution.(B)The court may order remedies available pursuant to Section 564 of the Code of Civil Procedure, under which the agent of the court may take all governmental actions necessary to bring the jurisdictions housing element into substantial compliance pursuant to this article in order to remedy identified deficiencies. The court shall determine whether the housing element of the jurisdiction substantially complies with this article and, once the court makes that determination, it shall have the same force and effect, for all purposes, as the departments determination that the housing element substantially complies with this article. An agent appointed pursuant to this paragraph shall have expertise in planning in California.(4)This subdivision does not limit a courts discretion to apply any and all remedies in an action or special proceeding for a violation of any law identified in subdivision (j).(m)In determining the application of the remedies available under subdivision (l), the court shall consider whether there are any mitigating circumstances delaying the jurisdiction from coming into compliance with state housing law. The court may consider whether a city, county, or city and county is making a good faith effort to come into substantial compliance or is facing substantial undue hardships.(n)Nothing in this section shall limit the authority of the office of the Attorney General to bring a suit to enforce state law in an independent capacity. The office of the Attorney General may seek all remedies available under law including those set forth in this section.(o)Notwithstanding Sections 11040 and 11042, if the Attorney General declines to represent the department in any action or special proceeding brought pursuant to a notice or referral under subdivision (j), the department may appoint or contract with other counsel for purposes of representing the department in the action or special proceeding.(p)Notwithstanding any other provision of law, the statute of limitations set forth in subdivision (a) of Section 338 of the Code of Civil Procedure shall apply to any action or special proceeding brought by the office of the Attorney General or pursuant to a notice or referral under subdivision (j), or by the department pursuant to subdivision (o).SEC. 4.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act or because costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
REVISIONS: HeadingLine 2.It is the intent of the Legislature in enacting this chapter to provide cities and counties with opportunities to adaptively reuse existing buildings, such as office buildings, in order to facilitate their conversion to housing and mixed uses.
51298.1.For purposes of this chapter:
(a)Adaptive reuse investment incentive funds means, with respect to a qualified adaptive reuse project property for a relevant fiscal year, an amount up to or equal to the amount of ad valorem property tax revenue allocated to the participating local agency, excluding the revenue transfers required by Sections 97.2 and 97.3 of the Revenue and Taxation Code, from the taxation of that portion of the total assessed value of the real and personal property of an adaptive reuse project property that is in excess of the qualified adaptive reuse project propertys valuation at the time of the proponents initial request for funding.
(b)Program means an adaptive reuse investment incentive program established pursuant to Section 51298.2.
(c)(1)Proponent means a party or parties that meet all of the following criteria:
(A)The party is named in the application for a permit to construct a qualified adaptive reuse project submitted to the city or county.
(B)The party will either be the fee owner of the qualified adaptive reuse project property upon the completion of that development or the party enters a sale-leaseback transaction for the qualified adaptive reuse project property.
(2)If a proponent that is receiving capital investment incentive amounts subsequently leases the qualified adaptive reuse project property to another party, the lease may provide for the payment to that lessee of any portion of adaptive reuse investment incentive funds. A lessee that receives any portion of adaptive reuse investment incentive funds shall also be considered a proponent for the purposes of this chapter.
(d)Qualified adaptive reuse project property means an adaptive reuse proposed pursuant to Article 11.5 (commencing with Section 65658) of Chapter 3 of Division 1 of Title 7 that is located within the city or county.
51298.2.(a)Commencing in the 202425 fiscal year, the governing body of a city or county may, by ordinance or resolution, establish an adaptive reuse investment incentive program pursuant to this chapter.
(b)(1)A city or county that establishes a program shall, upon the approval by a majority of the entire membership of its governing body of a written request therefor, pay adaptive reuse investment incentive funds to the proponent of a qualified adaptive reuse project property for up to 15 consecutive fiscal years.
(2)A request for the payment of adaptive reuse investment incentive funds shall be filed by a proponent in writing with the governing body of the city or county in the time and manner established by that governing body.
(c)After a city or county approves a request for the payment of adaptive reuse investment incentive funds, payment of adaptive reuse investment incentive funds shall begin with the first fiscal year that commences after the qualified adaptive reuse property is issued a certificate of occupancy.
51298.3.A city or special district may pay to the city or county an amount equal to the amount of ad valorem property tax revenue allocated to that city or special district, but not the actual allocation, derived from the taxation of that portion of the total assessed value of that real property that is in excess of the propertys valuation at the time of the proponents initial request for funding.
SEC. 2.Article 11.5 (commencing with Section 65658) is added to Chapter 3 of Division 1 of Title 7 of the Government Code, to read:11.5.Office to Housing Conversion Act1.General Provisions65658.This article may be cited as the Office to Housing Conversion Act.
65658.1.For purposes of this article:
(a)(1)Adaptive reuse means the retrofitting and repurposing of an existing building to create new residential or mixed uses including office conversion projects.
(2)Adaptive reuse shall not include the retrofitting and repurposing of any light industrial use, unless the planning director or equivalent position determines that the specific light industrial use is no longer useful for industrial purposes.
(b)Adjacent portion of the project means the portion of the project located on a site adjacent to the proposed repurposed existing building.
(c)Broadly applicable housing affordability requirement means a local ordinance or other regulation that requires a minimum percentage of affordable units and that applies to a variety of housing development types or entitlement pathways.
(d)Impact fee means any fee imposed pursuant to Chapter 5 (commencing with Section 66000).
(e)Historical resource means the same as defined in subdivision (j) of Section 5020.1 of the Public Resources Code, or a resource listed in the California Register of Historical Resources as described in Section 5024.1 of the Public Resources Code.
(f)Light industrial use means a use that is not subject to permitting by a district, as defined in Section 39025 of the Health and Safety Code.
(g)Local government means a city, including a charter city, a county, or a city and county.
(h)Mixed use means residential uses combined with at least one other land use, but not including any industrial use.
(i)Office conversion project means the conversion of a building used for office purposes or a vacant office building into residential dwelling units.
(j)Persons and families of low or moderate income means the same as defined in Section 50093 of the Health and Safety Code.
(k)Phase I environmental assessment means the same as defined in Section 78090 of the Health and Safety Code.
(l)Phase II environmental assessment means the same as defined in Section 25403 of the Health and Safety Code.
(m)Preliminary endangerment assessment means the same as defined in Section 78095 of the Health and Safety Code.
(n)Residential uses includes, but is not limited to, housing units, dormitories, boarding houses, and group housing. Residential uses does not include prisons or jails.
(o)Use by right means that the citys or countys review of the adaptive reuse project may not require a conditional use permit, planned unit development permit, or other discretionary city or county review or approval that would constitute a project for purposes of Division 13 (commencing with Section 21000) of the Public Resources Code. Any subdivision of the sites shall be subject to all laws, including, but not limited to, a city or county ordinance implementing the Subdivision Map Act (Division 2 (commencing with Section 66410)).
65658.3.A local government may adopt an ordinance to implement this article and specify the process and requirements applicable to adaptive reuse projects, provided that the ordinance is consistent with, and does not inhibit the objectives of, this article.
65658.4.The Legislature finds and declares that this article addresses a matter of statewide concern rather than a municipal affair as that term is used in Section 5 of Article XI of the California Constitution. Therefore, this article applies to all cities, including charter cities.
2.Streamlined, Ministerial Approval65658.5.(a)An adaptive reuse project that meets the requirements of subdivision (b) shall be deemed a use by right in all zones, regardless of the zoning of the site, and subject to the streamlined, ministerial review process described in Section 65658.7, except that the nonresidential uses of a proposed mixed-use adaptive reuse project shall be consistent with the land uses allowed by the zoning or a continuation of an existing zoning nonconforming use.
(b)An adaptive reuse project shall comply with all of the following requirements:
(1)The adaptive reuse project is proposed for any of the following, as applicable:
(A)The project is proposed for an existing building that is less than 50 years old.
(B)The project is proposed for an existing building that is listed on a local, state, or federal register of historic resources and the adaptive reuse project proponent complies with Section 65658.7.
(C)The project is proposed for an existing building that is more than 50 years old and the local government has evaluated the site through a preliminary application submitted pursuant to subdivision (a) of Section 65658.7 and either of the following are satisfied:
(i)The local government determines that the building or site is a historic resource and the adaptive reuse project proponent complies with Section 65658.7.
(ii)The local government determines that the building or site is not a historic resource.
(2)The project complies with any broadly applicable housing affordability requirement adopted by the local government. Notwithstanding any other law, a local government shall not impose or enforce any broadly applicable housing affordability requirement on the housing units of an adaptive reuse project that requires the project to restrict more than 10 percent of retrofitted or repurposed units as affordable.
(3)(A)If the adaptive reuse project includes mixed uses, at least one-half of the square footage of the adaptive reuse project shall be dedicated to residential uses. For purposes of this subparagraph, square footage of the project does not include underground space, including basements or underground parking garages.
(B)If the adaptive reuse project is also an office conversion project that creates at least one new housing unit, the development proponent may elect for subparagraph (A) to not apply to the project. Both of the following restrictions shall apply to a project subject to this subparagraph:
(i)The adaptive reuse project shall not be eligible to include adjacent uses pursuant to Section 65658.6, unless the adjacent uses are separately approved projects that do not utilize the provisions of this article.
(ii)The streamlined approval process established pursuant to this article shall apply only to the new housing units created.
(4)(A)The adaptive reuse project proponent completes a Phase I environmental assessment, and a Phase II environmental assessment, if warranted.
(B)If a recognized environmental condition is found, the adaptive reuse project proponent shall undertake a preliminary endangerment assessment prepared by an environmental assessor to determine the existence of any release of a hazardous substance on the site and to determine the potential for exposure of future occupants to significant health hazards from any nearby property or activity.
(i)If a release of hazardous substance is found to exist on the site, prior to occupancy, the project proponent shall agree to remove the release or any significant effect of the release shall be mitigated to a level of insignificance in compliance with state and federal requirements.
(ii)If a potential for exposure to significant hazards from surrounding properties or activities is found to exist, the effects of the potential exposure shall be mitigated to a level of insignificance in compliance with current state and federal requirements.
(c)An adaptive reuse project that meets all the requirements of subdivision (b) may include rooftop structures that exceed any applicable height limitation imposed by the local government, provided that the rooftop structure does not exceed one story and is used for shared amenities.
65658.6.(a)An adaptive reuse project that satisfies the requirements of Section 65658.5 may include the development of new residential or mixed-use structures on undeveloped areas and parking areas on the parcels adjacent to the proposed adaptive reuse project site if all of the following requirements are met:
(1)The adjacent portion of the project on the site adjacent to the proposed repurposed existing building complies with the requirements of any of the following:
(A)The requirements of paragraph (5) of subdivision (a) of Section 65913.4.
(B)The requirements of the Affordable Housing and High Road Jobs Act of 2022 (Chapter 4.1 (commencing with Section 65912.100)).
(C)The requirements of the Middle Class Housing Act of 2022 (Section 65852.24).
(2)The adjacent portion of the project is located on a parcel that satisfies the requirements specified in subparagraphs (A) and (B) of paragraph (2) of subdivision (a) of Section 65913.4.
(3)The adjacent portion of the project is located on a parcel that satisfies the requirements specified in subparagraphs (B) to (K), inclusive, of paragraph (6) of subdivision (a) of Section 65913.4.
(4)The adjacent portion of the project is located on a parcel that satisfies the requirements specified in paragraph (7) of subdivision (a) of Section 65913.4.
(5)The applicant and local agency comply with the requirements of subdivision (b) of Section 65913.4.
(6)Any existing open space on the proposed project site is not a contributor to a historic resource.
(b)The adjacent portion of the project shall be eligible for a density bonus, incentives or concessions, waivers or reductions of development standards, and parking ratios pursuant to Section 65915.
(c)For purposes of this section, adjacent portion of the project means the portion of the project located on a site adjacent to the proposed repurposed existing building.
65658.7.(a)(1)Before submitting an application for an adaptive reuse project pursuant to Section 65658.5 for a structure that is more than 50 years old and not listed on a local, state, or federal register of historic resources, the development proponent shall submit to the local government a notice of its intent to submit an application. The notice of intent shall be in the form of a preliminary application that includes all of the information described in Section 65941.1.
(2)Upon receipt of a notice of intent to submit an application described in subdivision (a), the local government shall evaluate the project site for historical resources. The local government shall make a historic resource significance determination within 90 days of submission of the notice of intent for purposes of paragraph (1) of subdivision (b) of Section 65658.5.
(b)If the adaptive reuse project is proposed for an existing building that is listed on a local, state, or federal register of historic resources or if the local government has determined that the project site is a significant historic resource pursuant to subdivision (a), the adaptive reuse project proponent shall sign an affidavit declaring that the project will only move forward if it complies with either of the following:
(1)The United States Secretary of the Interiors Standards for Rehabilitation, as found in Part 67 of Title 36 of the Code of Federal Regulations.
(2)The project is awarded federal historic rehabilitation tax credits pursuant to Section 47 of Internal Revenue Code, or state historic rehabilitation tax credits pursuant to Section 17053.91 or 23691 of the Revenue and Taxation Code.
(c)(1)Notwithstanding subdivision (b), if the adaptive reuse project is proposed for a site that is listed on a local, state, or federal historic register and the adaptive reuse project proponent does not sign an affidavit pursuant to subdivision (b), the local government shall process the adaptive reuse project pursuant to Section 65658.5, but the local government may deny or conditionally approve the project if the local government makes a finding that the project will cause a significant adverse impact to historic resources. A local agency may impose conditions of approval to mitigate impacts to historic resources and to comply with the United States Secretary of the Interiors Standards for Rehabilitation, as found in Part 67 of Title 36 of the Code of Federal Regulations, but shall not impose other conditions of approval.
(2)Review of an adaptive reuse project pursuant to this section shall not constitute a project for purposes of Division 13 (commencing with Section 21000) of the Public Resources Code.
65658.8.(a)(1)Notwithstanding any local law, if a local governments planning director or equivalent position determines that an adaptive reuse project submitted pursuant to this article is consistent with the objective planning standards specified in Section 65658.5 and Section 65658.6, if applicable, the local government shall approve the adaptive reuse project. Upon a determination that an adaptive reuse project submitted pursuant to this section is in conflict with any of the objective planning standards specified in Section 65658.5 or Section 65658.6, if applicable, the local government staff or relevant local planning and permitting department that made the determination shall provide the development proponent written documentation of which standard or standards the development conflicts with, and an explanation for the reason or reasons the development conflicts with that standard or standards, as follows:
(A)Within 60 days of submittal of the adaptive reuse project to the local government pursuant to this section if the project contains 150 or fewer housing units.
(B)Within 90 days of submittal of the adaptive reuse project to the local government pursuant to this section if the project contains more than 150 housing units.
(2)If the local governments planning director or equivalent position fails to provide the required documentation pursuant to paragraph (1), the adaptive reuse project shall be deemed to satisfy the objective planning standards specified in Section 65658.5 and Section 65658.6, if applicable.
(3)For purposes of this section, an adaptive reuse project is consistent with the objective planning standards specified in Section 65658.5 and Section 65658.6, if applicable, if there is substantial evidence that would allow a reasonable person to conclude that the project is consistent with the objective planning standards. The local government shall not determine that an adaptive reuse project, including an application for a modification under subdivision (f), is in conflict with the objective planning standards on the basis that application materials are not included, if the application contains substantial evidence that would allow a reasonable person to conclude that the project is consistent with the objective planning standards.
(4)Upon submittal of an application for streamlined, ministerial approval pursuant to this section to the local government, all departments of the local government that are required to issue an approval of the adaptive reuse project before the granting of an entitlement shall comply with the requirements of this section within the time periods specified in paragraph (1).
(b)(1)Any design review of the adjacent portion of the project may be conducted by the local governments planning commission or any equivalent board or commission responsible for design review. That design review shall be objective and be strictly focused on assessing compliance with criteria required for streamlined projects. That design review shall be completed, and if the project is consistent with all objective standards, the local government shall approve the project as follows and shall not in any way inhibit, chill, or preclude the ministerial approval provided by this article or its effect, as applicable:
(A)Within 90 days of submittal of the adaptive reuse project to the local government pursuant to this section if the project contains 150 or fewer housing units.
(B)Within 180 days of submittal of the qualified adaptive reuse project to the local government pursuant to this section if the project contains more than 150 housing units.
(2)If the adaptive reuse project is consistent with the requirements of Section 65658.5 and Section 65658.6, if applicable, and is consistent with all objective subdivision standards in the local subdivision ordinance, an application for a subdivision pursuant to the Subdivision Map Act (Division 2 (commencing with Section 66410)) shall be exempt from the requirements of the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code) and shall be subject to the public oversight timelines set forth in paragraph (1).
(3)If a local government determines that an adaptive reuse project submitted pursuant to this article is in conflict with any of the standards imposed pursuant to paragraph (1), it shall provide the project proponent written documentation of which objective standard or standards the adaptive reuse project conflicts with, and an explanation for the reason or reasons the project conflicts with that objective standard or standards consistent with the timelines described in paragraph (1) of subdivision (a).
(c)(1)Notwithstanding any law, a local government, whether or not it has adopted an ordinance governing automobile parking requirements in multifamily developments, shall not impose automobile parking standards for an adjacent portion of the project that was approved pursuant to this article in any of the following instances:
(A)The adjacent portion of the project is located within one-half mile of public transit.
(B)The adjacent portion of the project is located within an architecturally and historically significant historic district.
(C)When on-street parking permits are required but not offered to the occupants of the adjacent portion of the project.
(D)When there is a car share vehicle located within one block of the adjacent portion of the project.
(2)If the adjacent portion of the project does not fall within any of the categories described in paragraph (1), the local government shall not impose automobile parking requirements for the adjacent portion of the project approved pursuant to this article that exceed one parking space per unit.
(d)Notwithstanding any law, a local government shall not require any of the following prior to approving an adaptive reuse project that meets the requirements of this article:
(1)Studies, information, or other materials that do not pertain directly to determining whether the adaptive reuse project is consistent with the objective planning standards applicable to the development.
(2)(A)Compliance with any standards necessary to receive a postentitlement permit.
(B)This paragraph does not prohibit a local agency from requiring compliance with any standards necessary to receive a postentitlement permit after a permit has been issued pursuant to this section.
(C)For purposes of this paragraph, postentitlement permit has the same meaning as provided in subparagraph (A) of paragraph (3) of subdivision (j) of Section 65913.3.
(e)(1)If a local government approves an adaptive reuse project pursuant to this article, then, notwithstanding any other law, that approval shall not expire if the project satisfies both of the following requirements:
(A)The project includes public investment in housing affordability, beyond tax credits.
(B)At least 20 percent of the units are affordable to households making at or below 80 percent of the area median income.
(2)(A)If a local government approves an adaptive reuse project pursuant to this article, and the project does not satisfy the requirements of subparagraphs (A) and (B) of paragraph (1), that approval shall remain valid for three years from the date of the final action establishing that approval, or if litigation is filed challenging that approval, from the date of the final judgment upholding that approval. Approval shall remain valid for a project provided construction activity, including demolition and grading activity, on the development site has begun pursuant to a permit issued by the local jurisdiction and is in progress. For purposes of this subdivision, in progress means one of the following:
(i)Construction has begun and has not ceased for more than 180 days.
(ii)If the project requires multiple building permits, an initial phase has been completed, and the project proponent has applied for and is diligently pursuing a building permit for a subsequent phase, provided that once it has been issued, the building permit for the subsequent phase does not lapse.
(B)Notwithstanding subparagraph (A), a local government may grant a project a one-time, one-year extension if the project proponent can provide documentation that there has been significant progress toward getting the adaptive reuse project construction ready, such as filing a building permit application.
(3)If the qualified adaptive reuse project proponent requests a modification pursuant to subdivision (f), then the time during which the approval shall remain valid shall be extended for the number of days between the submittal of a modification request and the date of its final approval, plus an additional 180 days to allow time to obtain a building permit. If litigation is filed relating to the modification request, the time shall be further extended during the pendency of the litigation. The extension required by this paragraph shall only apply to the first request for a modification submitted by the development proponent.
(f)(1)(A)A development proponent may request a modification to a qualified adaptive reuse project that has been approved under the streamlined approval process provided in this article if that request is submitted to the local government before the issuance of the final building permit required for construction of the adaptive reuse project.
(B)Except as provided in paragraph (3), the local government shall approve a modification if it determines that the modification is consistent with the objective planning standards specified in subdivision (a) that were in effect when the original adaptive reuse project application was first submitted.
(C)The local government shall evaluate any modifications requested pursuant to this subdivision for consistency with the objective planning standards using the same assumptions and analytical methodology that the local government originally used to assess consistency for the adaptive reuse project that was approved for streamlined, ministerial approval pursuant to subdivision (a).
(2)Upon receipt of the adaptive reuse project proponents application requesting a modification, the local government shall determine if the requested modification is consistent with the objective planning standard and either approve or deny the modification request within 60 days after submission of the modification, or within 90 days if design review is required.
(3)Notwithstanding paragraph (1), the local government may apply objective planning standards to an adjacent portion of the project adopted after the project application was first submitted to the requested modification in any of the following instances:
(A)The adjacent portion of the project is revised such that the total number of residential units or total square footage of construction changes by 15 percent or more. The calculation of the square footage of construction changes shall not include underground space.
(B)The adjacent portion of the project is revised such that the total number of residential units or total square footage of construction changes by 5 percent or more and it is necessary to subject the project to an objective standard beyond those in effect when the project application was submitted in order to mitigate or avoid a specific, adverse impact, as that term is defined in subparagraph (A) of paragraph (1) of subdivision (j) of Section 65589.5, upon the public health or safety and there is no feasible alternative method to satisfactorily mitigate or avoid the adverse impact. The calculation of the square footage of construction changes shall not include underground space.
(C)Objective building standards contained in the California Building Standards Code (Title 24 of the California Code of Regulations), including, but not limited to, building plumbing, electrical, fire, and grading codes, may be applied to all modification applications that are submitted prior to the first building permit application. Those standards may be applied to modification applications submitted after the first building permit application if agreed to by the development proponent.
(4)The local governments review of a modification request pursuant to this subdivision shall be strictly limited to determining whether the modification, including any modification to previously approved density bonus concessions or waivers, modify the projects consistency with the objective planning standards and shall not reconsider prior determinations that are not affected by the modification.
65658.9.(a)A local government shall issue a subsequent permit required for an adaptive reuse project approved under this article if the application substantially complies with the project as it was approved pursuant to Section 65658.8. Upon receipt of an application for a subsequent permit, the local government shall process the permit without unreasonable delay and shall not impose any procedure or requirement that is not imposed on projects that are not approved pursuant to this article. The local government shall consider the application for subsequent permits based upon the applicable objective standards specified in any state or local laws that were in effect when the original adaptive reuse project application was submitted, unless the proponent agrees to a change in objective standards. Issuance of subsequent permits shall implement the approved project, and review of the permit application shall not inhibit, chill, or preclude the adaptive reuse project. For purposes of this paragraph, a subsequent permit means a permit required subsequent to receiving approval under subdivision (a) of Section 65658.8, and includes, but is not limited to, demolition, grading, encroachment, and building permits and final maps, if necessary.
(b)(1)If a public improvement is necessary to implement a project subject to this article, including, but not limited to, a bicycle lane, sidewalk or walkway, public transit stop, driveway, street paving or overlay, a curb or gutter, a modified intersection, a street sign or street light, landscape or hardscape, an above-ground or underground utility connection, a water line, fire hydrant, storm or sanitary sewer connection, retaining wall, and any related work, and that public improvement is located on land owned by the local government, to the extent that the public improvement requires approval from the local government, the local government shall not exercise its discretion over any approval relating to the public improvement in a manner that would inhibit, chill, or preclude the project.
(2)If an application for a public improvement described in paragraph (1) is submitted to a local government, the local government shall do all of the following:
(A)Consider the application based upon any objective standards specified in any state or local laws that were in effect when the original adaptive reuse project application was submitted.
(B)Conduct its review and approval in the same manner as it would evaluate the public improvement if required by a project that is not eligible to receive ministerial or streamlined approval pursuant to this section.
(3)If an application for a public improvement described in paragraph (1) is submitted to a local government, the local government shall not do either of the following:
(A)Adopt or impose any requirement that applies to a project solely or partially on the basis that the project is eligible to receive ministerial or streamlined approval pursuant to this article.
(B)Unreasonably delay in its consideration, review, or approval of the application.
65658.10.(a)A local government shall not adopt or impose any requirement, including, but not limited to, increased fees or inclusionary housing requirements, that applies to a project solely or partially on the basis that the project is eligible to receive ministerial or streamlined approval pursuant to this article.
(b)This article shall not affect a project proponents ability to use any alternative streamlined by right permit processing adopted by a local government.
(c)This article shall not prevent a project from also qualifying as a housing development project entitled to the protections of Section 65589.5.
(d)Alterations to an existing building necessary to comply with the California Building Standards Code, International Existing Building Code, or California Historical Building Code shall not disqualify a qualified adaptive reuse project from the streamlined, ministerial review process established under this article.
3.Impact Fees65658.15.(a)Notwithstanding any other law, an adaptive reuse project shall be exempt from all impact fees that are not directly related to the impacts resulting from the change of use of the site from nonresidential to residential or mixed use. Any fees charged shall be proportional to the difference in impacts caused by the change of use.
(b)This section shall not apply to any adjacent portion of the project.
65658.16.Notwithstanding Chapter 5 (commencing with Section 66000), any impact fees imposed on an adaptive reuse project pursuant to this article shall, at the request of the project proponent, be collected on the date the certificate of occupancy is issued.
65658.17.(a)An adaptive reuse project proponent that utilizes Section 65658.16 shall be required to execute a contract to pay the fees, or applicable portion thereof, within the time specified.
(b)The obligation to pay the fees pursuant to this part shall inure to the benefit of, and be enforceable by, the local government that imposed the fee or charge, regardless of whether it is a party to the contract. The contract shall contain a legal description of the property affected, shall be recorded in the office of the county recorder of the county and, from the date of recordation, shall constitute a lien for the payment of the fees, which shall be enforceable against successors in interest to the property owner or lessee at the time of issuance of the building permit. The contract shall be recorded in the grantor-grantee index in the name of the public agency issuing the building permit as grantee and in the name of the property owner or lessee as grantor. The local government shall record a release of the obligation, containing a legal description of the property, in the event the obligation is paid in full, or a partial release in the event the fee or charge is prorated.
(c)The contract executed pursuant to subdivision (a) may require the property owner or lessee to provide appropriate notification of the opening of any escrow for the sale of the property for which the building permit was issued and to provide in the escrow instructions that the fee or charge be paid to the local government imposing the same from the sale proceeds in escrow prior to disbursing proceeds to the seller.
SEC. 3.Section 65585 of the Government Code is amended to read:65585.(a)In the preparation of its housing element, each city and county shall consider the guidelines adopted by the department pursuant to Section 50459 of the Health and Safety Code. Those guidelines shall be advisory to each city or county in the preparation of its housing element.
(b)(1)At least 90 days prior to adoption of a revision of its housing element pursuant to subdivision (e) of Section 65588, or at least 60 days prior to the adoption of a subsequent amendment to this element, the planning agency shall submit a draft element revision or draft amendment to the department. The local government of the planning agency shall make the first draft revision of a housing element available for public comment for at least 30 days and, if any comments are received, the local government shall take at least 10 business days after the 30-day public comment period to consider and incorporate public comments into the draft revision prior to submitting it to the department. For any subsequent draft revision, the local government shall post the draft revision on its internet website and shall email a link to the draft revision to all individuals and organizations that have previously requested notices relating to the local governments housing element at least seven days before submitting the draft revision to the department.
(2)The planning agency staff shall collect and compile the public comments regarding the housing element received by the city, county, or city and county and provide these comments to each member of the legislative body before it adopts the housing element.
(3)The department shall review the draft and report its written findings to the planning agency within 90 days of its receipt of the first draft submittal for each housing element revision pursuant to subdivision (e) of Section 65588 or within 60 days of its receipt of a subsequent draft amendment or an adopted revision or adopted amendment to an element. The department shall not review the first draft submitted for each housing element revision pursuant to subdivision (e) of Section 65588 until the local government has made the draft available for public comment for at least 30 days and, if comments were received, has taken at least 10 business days to consider and incorporate public comments pursuant to paragraph (1).
(c)In the preparation of its findings, the department may consult with any public agency, group, or person. The department shall receive and consider any written comments from any public agency, group, or person regarding the draft or adopted element or amendment under review.
(d)In its written findings, the department shall determine whether the draft element or draft amendment substantially complies with this article.
(e)Prior to the adoption of its draft element or draft amendment, the legislative body shall consider the findings made by the department. If the departments findings are not available within the time limits set by this section, the legislative body may act without them.
(f)If the department finds that the draft element or draft amendment does not substantially comply with this article, the legislative body shall take one of the following actions:
(1)Change the draft element or draft amendment to substantially comply with this article.
(2)Adopt the draft element or draft amendment without changes. The legislative body shall include in its resolution of adoption written findings that explain the reasons the legislative body believes that the draft element or draft amendment substantially complies with this article despite the findings of the department.
(g)Promptly following the adoption of its element or amendment, the planning agency shall submit a copy to the department.
(h)The department shall, within 60 days, review adopted housing elements or amendments and report its findings to the planning agency.
(i)(1)(A)The department shall review any action or failure to act by the city, county, or city and county that it determines is inconsistent with an adopted housing element or Section 65583, including any failure to implement any program actions included in the housing element pursuant to Section 65583. The department shall issue written findings to the city, county, or city and county as to whether the action or failure to act substantially complies with this article, and provide a reasonable time no longer than 30 days for the city, county, or city and county to respond to the findings before taking any other action authorized by this section, including the action authorized by subparagraph (B).
(B)If the department finds that the action or failure to act by the city, county, or city and county does not substantially comply with this article, and if it has issued findings pursuant to this section that an amendment to the housing element substantially complies with this article, the department may revoke its findings until it determines that the city, county, or city and county has come into compliance with this article.
(2)The department may consult with any local government, public agency, group, or person, and shall receive and consider any written comments from any public agency, group, or person, regarding the action or failure to act by the city, county, or city and county described in paragraph (1), in determining whether the housing element substantially complies with this article.
(j)The department shall notify the city, county, or city and county and may notify the office of the Attorney General that the city, county, or city and county is in violation of state law if the department finds that the housing element or an amendment to this element, or any action or failure to act described in subdivision (i), does not substantially comply with this article or that any local government has taken an action in violation of the following:
(1)Housing Accountability Act (Section 65589.5).
(2)Section 65863.
(3)Chapter 4.3 (commencing with Section 65915).
(4)Section 65008.
(5)Housing Crisis Act of 2019 (Chapter 654, Statutes of 2019, Sections 65941.1, 65943, and 66300).
(6)Section 8899.50.
(7)Section 65913.4.
(8)Article 11 (commencing with Section 65650).
(9)Article 12 (commencing with Section 65660).
(10)Section 65913.11.
(11)Section 65400.
(12)Section 65863.2.
(13)Chapter 4.1 (commencing with Section 65912.100).
(14)Section 65905.5.
(15)Section 65852.2.
(16)Section 65852.21.
(17)Section 65852.22.
(18)Section 65852.23.
(19)Section 65852.24.
(20)Section 65852.26.
(21)Section 66411.7.
(22)Section 65913.16.
(23)Article 2 (commencing with Section 66300.5) of Chapter 12.
(24)Section 65852.28.
(25)Section 65913.4.5.
(26)Section 66499.41.
(27)Article 11.5 (commencing with Section 65658).
(k)Commencing July 1, 2019, prior to the Attorney General bringing any suit for a violation of the provisions identified in subdivision (j) related to housing element compliance and seeking remedies available pursuant to this subdivision, the department shall offer the jurisdiction the opportunity for two meetings in person or via telephone to discuss the violation, and shall provide the jurisdiction written findings regarding the violation. This paragraph does not affect any action filed prior to the effective date of this section. The requirements set forth in this subdivision do not apply to any suits brought for a violation or violations of paragraphs (1) and (3) to (9), inclusive, of subdivision (j).
(l)In any action or special proceeding brought by the Attorney General relating to housing element compliance pursuant to a notice or referral under subdivision (j), the Attorney General may request, upon a finding of the court that the housing element does not substantially comply with the requirements of this article pursuant to this section, that the court issue an order or judgment directing the jurisdiction to bring its housing element into substantial compliance with the requirements of this article. The court shall retain jurisdiction to ensure that its order or judgment is carried out. If a court determines that the housing element of the jurisdiction substantially complies with this article, it shall have the same force and effect, for purposes of eligibility for any financial assistance that requires a housing element in substantial compliance and for purposes of any incentives provided under Section 65589.9, as a determination by the department that the housing element substantially complies with this article.
(1)If the jurisdiction has not complied with the order or judgment after 12 months, the court shall conduct a status conference. Following the status conference, upon a determination that the jurisdiction failed to comply with the order or judgment compelling substantial compliance with the requirements of this article, the court shall impose fines on the jurisdiction, which shall be deposited into the Building Homes and Jobs Trust Fund. Any fine levied pursuant to this paragraph shall be in a minimum amount of ten thousand dollars ($10,000) per month, but shall not exceed one hundred thousand dollars ($100,000) per month, except as provided in paragraphs (2) and (3). In the event that the jurisdiction fails to pay fines imposed by the court in full and on time, the court may require the Controller to intercept any available state and local funds and direct such funds to the Building Homes and Jobs Trust Fund to correct the jurisdictions failure to pay. The intercept of the funds by the Controller for this purpose shall not violate any provision of the California Constitution.
(2)If the jurisdiction has not complied with the order or judgment after three months following the imposition of fees described in paragraph (1), the court shall conduct a status conference. Following the status conference, if the court finds that the fees imposed pursuant to paragraph (1) are insufficient to bring the jurisdiction into compliance with the order or judgment, the court may multiply the fine determined pursuant to paragraph (1) by a factor of three. In the event that the jurisdiction fails to pay fines imposed by the court in full and on time, the court may require the Controller to intercept any available state and local funds and direct such funds to the Building Homes and Jobs Trust Fund to correct the jurisdictions failure to pay. The intercept of the funds by the Controller for this purpose shall not violate any provision of the California Constitution.
(3)If the jurisdiction has not complied with the order or judgment six months following the imposition of fees described in paragraph (1), the court shall conduct a status conference. Upon a determination that the jurisdiction failed to comply with the order or judgment, the court may impose the following:
(A)If the court finds that the fees imposed pursuant to paragraphs (1) and (2) are insufficient to bring the jurisdiction into compliance with the order or judgment, the court may multiply the fine determined pursuant to paragraph (1) by a factor of six. In the event that the jurisdiction fails to pay fines imposed by the court in full and on time, the court may require the Controller to intercept any available state and local funds and direct such funds to the Building Homes and Jobs Trust Fund to correct the jurisdictions failure to pay. The intercept of the funds by the Controller for this purpose shall not violate any provision of the California Constitution.
(B)The court may order remedies available pursuant to Section 564 of the Code of Civil Procedure, under which the agent of the court may take all governmental actions necessary to bring the jurisdictions housing element into substantial compliance pursuant to this article in order to remedy identified deficiencies. The court shall determine whether the housing element of the jurisdiction substantially complies with this article and, once the court makes that determination, it shall have the same force and effect, for all purposes, as the departments determination that the housing element substantially complies with this article. An agent appointed pursuant to this paragraph shall have expertise in planning in California.
(4)This subdivision does not limit a courts discretion to apply any and all remedies in an action or special proceeding for a violation of any law identified in subdivision (j).
(m)In determining the application of the remedies available under subdivision (l), the court shall consider whether there are any mitigating circumstances delaying the jurisdiction from coming into compliance with state housing law. The court may consider whether a city, county, or city and county is making a good faith effort to come into substantial compliance or is facing substantial undue hardships.
(n)Nothing in this section shall limit the authority of the office of the Attorney General to bring a suit to enforce state law in an independent capacity. The office of the Attorney General may seek all remedies available under law including those set forth in this section.
(o)Notwithstanding Sections 11040 and 11042, if the Attorney General declines to represent the department in any action or special proceeding brought pursuant to a notice or referral under subdivision (j), the department may appoint or contract with other counsel for purposes of representing the department in the action or special proceeding.
(p)Notwithstanding any other provision of law, the statute of limitations set forth in subdivision (a) of Section 338 of the Code of Civil Procedure shall apply to any action or special proceeding brought by the office of the Attorney General or pursuant to a notice or referral under subdivision (j), or by the department pursuant to subdivision (o).
SEC. 4.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act or because costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
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Date
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Status
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|---|---|
| Sep 27, 2024 | Vetoed by Governor. |
| Sep 13, 2024 | Enrolled and presented to the Governor at 4 p.m. |
| Aug 31, 2024 | Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 57. Noes 8.). |
| Aug 31, 2024 | In Assembly. Concurrence in Senate amendments pending. |
| Aug 30, 2024 | Read third time. Passed. Ordered to the Assembly. (Ayes 27. Noes 11.). |
| Aug 27, 2024 | From committee: That the measure be returned to Senate Floor for consideration. (Ayes 4. Noes 1.) (August 27) |
| Aug 26, 2024 | Read second time. Ordered to third reading. |
| Aug 26, 2024 | Re-referred to Com. on RLS pursuant to Senate Rule 29.10(b). |
| Aug 26, 2024 | From committee: Be re-referred to Com. on L. GOV. pursuant to Senate Rule 29.10(b). (Ayes 5. Noes 0.) Re-referred to Com. on L. GOV. |
| Aug 23, 2024 | Read third time and amended. Ordered to second reading. |
| Aug 13, 2024 | Read second time. Ordered to third reading. |
| Aug 12, 2024 | From committee: Be ordered to second reading pursuant to Senate Rule 28.8. |
| Jul 31, 2024 | In committee: Hearing postponed by committee. |
| Jul 3, 2024 | Read second time and amended. Re-referred to Com. on APPR. |
| Jul 3, 2024 | From committee: Amend, and do pass as amended and re-refer to Com. on APPR. (Ayes 8. Noes 2.) (July 2). |
| Jun 12, 2024 | Read second time and amended. Re-referred to Com. on HOUSING. |
| Jun 11, 2024 | From committee: Amend, and do pass as amended and re-refer to Com. on HOUSING. (Ayes 4. Noes 3.) (June 11). |
| Jun 5, 2024 | Referred to Coms. on L. GOV. and HOUSING. |
| May 23, 2024 | In Senate. Read first time. To Com. on RLS. for assignment. |
| May 22, 2024 | Read third time. Passed. Ordered to the Senate. (Ayes 58. Noes 5. Page 5557.) |
| May 9, 2024 | Read second time. Ordered to third reading. |
| May 8, 2024 | From committee: Do pass. (Ayes 11. Noes 3.) (May 8). |
| May 8, 2024 | Coauthors revised. |
| Apr 25, 2024 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 6. Noes 1.) (April 24). Re-referred to Com. on APPR. |
| Apr 25, 2024 | Coauthors revised. |
| Apr 22, 2024 | Re-referred to Com. on L. GOV. |
| Apr 18, 2024 | From committee chair, with author's amendments: Amend, and re-refer to Com. on L. GOV. Read second time and amended. |
| Apr 17, 2024 | From committee: Do pass and re-refer to Com. on L. GOV. (Ayes 9. Noes 0.) (April 17). Re-referred to Com. on L. GOV. |
| Mar 11, 2024 | Referred to Coms. on H. & C.D. and L. GOV. |
| Feb 17, 2024 | From printer. May be heard in committee March 18. |
| Feb 16, 2024 | Read first time. To print. |
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Date
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Description
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Location
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Votes
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|---|---|---|---|---|
| Aug 31, 2024 | AB 3068 Haney Concurrence in Senate Amendments | Assembly Floor |
Passed |
|
| Aug 30, 2024 | Assembly 3rd Reading AB3068 Haney et al. By Blakespear | Senate Floor |
Passed |
|
| Aug 27, 2024 | That the measure be returned to Senate Floor for consideration. Ordered to third reading. | Senate Standing Committee on Local Government |
Passed |
|
| Jul 2, 2024 | Do pass as amended, but first amend, and re-refer to the Committee on [Appropriations] | Senate Standing Committee on Housing |
Passed |
|
| Jun 11, 2024 | Do pass as amended, but first amend, and re-refer to the Committee on [Housing] | Senate Standing Committee on Local Government |
Passed |
|
| May 22, 2024 | AB 3068 Haney Assembly Third Reading | Assembly Floor |
Passed |
|
| May 8, 2024 | Do pass. | Assembly Standing Committee on Appropriations |
Passed |
|
| Apr 24, 2024 | Do pass and be re-referred to the Committee on [Appropriations] | Assembly Standing Committee on Local Government |
Passed |
|
| Apr 17, 2024 | Do pass and be re-referred to the Committee on [Local Government] | Assembly Standing Committee on Housing and Community Development |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| Abundant Housing LA | ** Support | |
| Advance SF | ** Support | |
| Aids Healthcare Foundation | ** Support | |
| Bay Area Council | ** Support | |
| BOMA San Francisco | ** Support | |
| Brownstein Hyatt Farber Schreck | * Support | May 8, 2024 |
| Buckeye Properties | * Support | Apr 24, 2024 |
| California Apartment Association | ** Support | |
| California Building Industry Association | ** Against | |
| California Business Properties Association | * Support | Jul 2, 2024 |
| California community builders | ** Support | |
| California Conference of Carpenters | * Support | Jun 12, 2024 |
| California Contract Cities Association | ** Against | |
| California Housing Consortium | ** Against | |
| California Housing Partnership | ** Against | |
| California Preservation Foundation | ** Support | |
| California Special Districts Association | * Against | Jun 11, 2024 |
| California YIMBY | ** Against | |
| Circulate San Diego | ** Support | |
| City of Santa Clarita | ** Against | |
| City of Thousand Oaks | ** Against | |
| CivicWell | ** Support | |
| East Bay for Everyone | ** Support | |
| East Bay YIMBY | ** Support | |
| Emerald Fund | ** Support | |
| Fieldstead And Company | ** Against | |
| Greenlining Institute; The | ** Support | |
| Grow the Richmond | ** Support | |
| Healthy Housing Foundation | * Support | Apr 17, 2024 |
| Housing Action Coalition | ** Against | |
| Housing California | ** Against | |
| Housing Trust Silicon Valley | ** Support | |
| International Interior Design Association Northern California Chapter Inc | ** Support | |
| International Interior Design Association Southern California Chapter | ** Support | |
| LeadingAge California | ** Support | |
| League Of California Cities | ** Against | |
| Lendlease | ** Support | |
| Lighthouse Public Affairs LLC | * Support | Jun 11, 2024 |
| Livable Communities Initiative | ** Support | |
| Mountain View YIMBY | ** Support | |
| Napa-Solano for Everyone | ** Support | |
| Northern Neighbors | ** Support | |
| Peninsula for Everyone | ** Support | |
| Plant Construction | ** Support | |
| Presidio Bay Ventures | ** Support | |
| Progress Noe Valley | ** Support | |
| Related California | ** Support | |
| San Francisco Chamber of Commerce | ** Support | |
| San Francisco Yimby | ** Support | |
| San Luis Obispo Yimby | ** Support | |
| Sandhill Properties | * Support | Apr 24, 2024 |
| Santa Clara Valley Open Space Authority | * Support | Apr 24, 2024 |
| Santa Cruz Yimby | ** Support | |
| Santa Rosa Yimby | ** Support | |
| South Bay Yimby | ** Support | |
| Southside Forward | ** Support | |
| SPUR | ** Support | |
| State Building and Construction Trades Council | ** Support | |
| Streets for All | ** Support | |
| Streets for People | ** Support | |
| UB Action | * Support | May 8, 2024 |
| Union Square Alliance | ** Support | |
| Urban Environmentalists | ** Support | |
| Ventura County YIMBY | ** Support | |
| Webcor Builders | ** Support | |
| Western Electrical Contractors | ** Against | |
| Yimby Action | ** Support |
GOVERNOR'S VETO
GV Bill Id:AB 3068
Author:(Haney)
As Enrolled Ver:September 5, 2024
2/3 vote
SUMMARY
Establishes the Office to Housing Conversion Act (the Act), creating streamlined, ministerial approvals process for adaptive reuse projects, as defined, and providing certain financial incentives for the adaptive reuse of existing buildings.
- Establish new labor requirements for any adaptive reuse development pursuant to the Act that includes 40 or more housing units, with additional requirements for proposals on a building taller than four stories.
- Increase the amount of time a local government may pay incentive funds to an adaptive reuse project from 15 years to 30 years.
- Exempt hotels, or any mixed-use buildings that contain hotel uses, from the Act unless they have been discontinued for at least five years prior to January 1, 2025.
- If there is a vacant hotel use proposed for adaptive reuse, it shall be subject to the existing local approvals process required by a jurisdiction, rather than the provisions of the Act.
- Allow adaptive reuse projects to occur on sites that were industrial uses provided that the building is no longer economically viable for an industrial use, as specified.
- Define "industrial uses" as utilities, manufacturing, transportation storage and maintenance facilities, warehousing uses, and any other use that is a source that is subject to permitting by a district, with certain exemptions.
- Define "project labor agreement."
- Define "urban uses" to have the same meaning as it does in AB 2011 (Wicks), Chapter 647, Statutes of 2022.
- Specify that "adjacent portion of the project" includes buildings on the same parcel as the proposed adaptive reuse project.
- Provide that a local ordinance adopted to implement this bill is not a project for the purposes of CEQA.
- Clarify that nothing prevents local governments from establishing a local adaptive reuse program, as long as the ordinance does not prohibit an applicant from using the Act.
- Remove the provisions of Government Code (GC) 65585 from this bill (those provisions are now in AB 2667 (Santiago)).
- Remove reference to "urban clusters" regarding geographic applicability and instead applies the Act instead to "urbanized areas."
- Prohibit a local government from imposing local development standards on adaptive reuse projects that would require alteration of the existing building envelope, except if alteration is needed to conform with a local building code.
- Restrict the applicability to project sites that are 20 acres or less.
- Specify that adaptive reuse projects shall not violate conservation easements.
- Clarify that the labor standards of the Affordable Housing and High Road Jobs Act of 2022 and the Middle Class Housing Act of 2022 apply if an applicant seeks to develop the adjacent lot in accordance with either of those Acts.
- Specify that a local agency must approve projects under the Office to Housing Conversion Act ministerially, whether or not it has adopted an implementation ordinance.
- Establish a 30-day local review timeframe when an adaptive reuse project is resubmitted to the local government following a determination of a conflict with one or more objective planning standards.
- Remove the local design review timeframe provisions from the Act and instead includes design review in the overall project review timeframes.
- Specify that the environmental assessment required in the bill is a condition of final approval rather than an assessment the developer must conduct prior to gaining eligibility for streamlining.
- Provide that an adaptive reuse project that does not currently include on-site automobile parking is not required to add new on-site parking.
- Provides that an adaptive reuse project that currently includes on-site parking is not required to meet local minimum parking requirements except for requirements for parking spaces for persons with disabilities and parking spaces equipped with electric vehicle charging infrastructure.
- Remove all references to the International Existing Building Code of the International Code Council, which do not apply in California.
- Provide that adaptive reuse projects are eligible for a density bonus, as specified.
- Add specificity to obligations for a project applicant and local government related to noticing and preserving historical resources such as building facades and interior character defining spaces in a manner consistent with federal standards.
- Make the environmentally sensitive site criteria consistent with the criteria in AB 2243 (Wicks) with respect to applicability in the Coastal Zone.
- Add findings and declarations.
- Make other technical changes.
Governor’s Veto Message
This bill would establish the Office to Housing Conversion Act, creating a ministerial approval process for adaptive reuse projects, aimed at converting nonresidential buildings, such as offices or industrial sites, into residential or mixed-use developments. The bill also provides financial incentives for developers, including the option for local governments to allocate up to 30 years of property tax revenue to support affordable housing conversions, and establishes specific labor standards for qualified adaptive reuse projects.
While I strongly support efforts to address California's housing crisis by promoting adaptive reuse projects, this bill raises several concerns. The proposed compliance and enforcement mechanisms for labor standards, including the issuance of stop-work orders for any violations, represent a significant expansion beyond existing law, which limits this remedy to a narrow subset of violations, such as those posing immediate threats to health and safety. Moreover, the bill lacks clear procedures for contesting violations or addressing noncompliance, creating considerable uncertainty that could lead to delays, and increased costs, potentially making projects financially unviable - ultimately undermining the bill's goal of increasing housing production.
COMMENTS
Statewide Housing Needs: California's housing crisis is a half-century in the making. After decades of underproduction, housing supply is far behind need, and housing costs are soaring. California must plan for more than 2.5 million new homes, and no less than one million of those homes must be affordable to lower-income households, by 2030.
Cost of building housing: It is expensive to build housing in California. The UC Berkeley Terner Center finds that challenging macroeconomic conditions, including inflation and high interest rates, affect the availability and cost of capital, resulting in rising costs for labor and materials. Furthermore, workforce and supply shortages have exacerbated the already high price of construction in California, and economic uncertainty has made equity partners and lenders apprehensive about financing new housing development proposals.
The cost of the labor required to build affordable housing in California are one of the factors that contribute to overall construction costs. The Terner Center's 2024 paper, Low-Income Housing Tax Credit Construction Costs: An Analysis of Prevailing Wages, provides insights into how prevailing wage requirements in particular impact construction costs. Prevailing wage requirements are regulations that mandate the minimum wage rates and benefits that must be paid to workers. These wage rates are typically set to reflect the wages and benefits that are commonly paid to workers in a specific area or region for similar work, often aligned with union-scale wages. The study found that LIHTC developments studied that were built with prevailing wage requirements cost an estimated $94,000 more per unit compared to projects developed without paying prevailing wages, though there is wide variability in the sample.[1] The authors also note that the mere presence of a prevailing wage requirement was not the only factor that resulted in that overall cost variability. Nonetheless, these requirements can contribute to the total expense of building housing, particularly affordable housing which already face cost constraints when it comes to making a development financially feasible. This bill would require prevailing wage to be paid for all adaptive reuse projects under the Act, consistent with the provisions of the Affordable Housing and High Road Jobs Act of 2022 (AB 2011, (Wicks), Chapter 647, Statutes of 2022). This requirement was taken in the Assembly Committee on Housing and Community Development to conform to the labor standards in prior streamlining bills.
In addition to the prevailing wage requirements, amendments taken by the author in the Senate on August 23, 2024 would further require all projects with more than 40 units in buildings with more than 4 stories to use "skilled and trained" workforce provisions. These requirements mandate that a certain percentage of the workers on a project be graduates of a state-approved apprenticeship program or possess equivalent training and qualifications. While these are noble goals, the "skilled and trained" mandates may make these already expensive projects cost-prohibitive for affordable housing developers. This requirement is especially difficult to navigate in rural and inland areas of the state that struggle to find an eligible workforce that meets these standards. Furthermore, the amendments taken in the Senate include compliance and enforcement mechanisms for labor standards that deviate from prior labor standard precedent, and may be unclear, thus potentially adding uncertainty to the construction stage of these adaptive reuse projects.
Adaptive Reuse: Adaptive reuse is the process of converting an existing non-residential building to housing. The ability to adaptively reuse a building is dependent on the initial design. For example, warehouses and big box retail could not functionally be adaptively reused, because their tall ceilings, single stories, and rudimentary plumbing would need to be completely reconstituted to be appropriate for human habitation. Office buildings maintain some potential for conversion, however, the large floor plate configuration of most office buildings makes it difficult to provide the light and air required for residential units throughout the building. It is not uncommon for unexpected hurdles to appear in adaptive reuse projects, adding time and cost. For these conversions to occur, it must be financially attractive to the property owner – something that has increased due to the downturn in the downtown office market since the COVID-19 pandemic.
The buildings most readily converted to housing are hotels and motels. These uses are already divided into quarters designed for short-term human habitation, and units can readily be converted to housing with the addition of kitchens. The viability of this conversion is visible in the success of Homekey, which created over 15,000 homes to date, with a cost of approximately $306,000 per unit - substantially less than the current cost to build newly constructed housing. Notably, this bill would not allow for the conversion of hotels unless those buildings were vacant for 5 years prior to the bills effective date, should it pass.
This bill would make the adaptive reuse of existing buildings mixed-use projects an allowable use in infill areas. This bill would allow for the new construction of mixed-use developments on vacant or underutilized parcels adjacent to an adaptive reuse project. Local governments would be required to approve a project that met the bill's specifications in an expedited timeframe.
Adaptive Reuse Funding: The Legislature has taken multiple actions to support adaptive reuse. HCD's Homekey program has allocated approximately $3.5 billion to convert hotels and motels to housing Californians at risk of, or experiencing, homelessness. The 2022-2023 budget included a $450 million General Fund allocation to convert existing buildings to affordable housing. AB 1695 (Santiago, Chapter 639, Statutes of 2022) requires any notice of funding availability issued by HCD for an affordable multifamily housing program to include adaptive reuse as an eligible activity. SB 451 (Atkins, Chapter 703, Statutes of 2019), established a $50 million program to facilitate the rehabilitation, including adaptive reuse, of historic buildings.
To help offset the costs associated with adaptive reuse projects, this bill would provide financial incentives for adaptive reuse projects by authorizing local agencies to establish an Adaptive Reuse Investment Incentive Program, through which an amount up to or equal to 30 years' worth of the amount of ad valorem property tax revenues could be transferred to the owners of projects to subsidize the affordability requirements. It would also align program requirements to encourage the utilization of existing programs state and federal programs. The bill would also limit a local government's ability to charge impact fees for projects that are not directly related to the impacts resulting from the change of use of the site from nonresidential to residential.
According to the Author
"Office vacancies across the state have hit record highs with Los Angeles and San Francisco both reaching over 30% vacancy rates. Many economists are theorizing that unless local and state governments act quickly, downtowns may be facing a doom-loop scenario with empty, devalued buildings leading to a severe decrease in local government tax bases, leading to decreased services and blight…Office to housing conversion is a win-win scenario that builds housing, preserves historic buildings, and creates new thriving communities in transit rich areas. California needs to get out of its own way and make office to housing conversions as easy as humanly possible. This bill does exactly that."
Arguments in Support
According to the California Preservation Foundation, the bill sponsor, "AB 3068 presents a unique opportunity to shape the future of California's communities while honoring our architectural heritage. With the state facing a significant housing shortfall, adaptive reuse offers a practical solution to repurpose vacant commercial buildings for residential and mixed-use purposes. This approach not only stimulates economic development but also serves as an environmentally sustainable alternative to new construction, significantly reducing the carbon footprint associated with building materials and energy consumption."
Arguments in Opposition
YIMBY Action writes in opposition, "YIMBY Action regrets to inform you of our decision to oppose your bill, AB 3068, the Office to Housing Conversion Act, which we had previously supported and sponsored. Today we were made aware of the concerns of the construction industry with new labor enforcement standards that were added to the bill in last week's amendments. Without a process to contest or cure an alleged labor violation, the these standards add so much risk to any project approved under this bill, whether it uses skilled and trained labor or not, that they likely forcelose the ability to finance any such project, completely eliminating the benefit of the streamlined approval process this bill offers. While we have appreciated your leadership on the important work of finding ways to streamline and incentivize adaptive reuse of office buildings and other commercial and historic properties into housing, the last minute amendments changing the labor standards both makes office conversions infeasible, and threaten years of careful negotiations for workable labor standards for housing construction of all types."
FISCAL COMMENTS
None.
VOTES
ASM HOUSING AND COMMUNITY DEVELOPMENT: 9-0-0
YES: Ward, Joe Patterson, Grayson, Kalra, Lee, Quirk-Silva, Reyes, Sanchez, Wilson
ASM LOCAL GOVERNMENT: 6-1-2
YES: Juan Carrillo, Kalra, Pacheco, Ramos, Ward, Wilson
NO: Waldron
ABS, ABST OR NV: Essayli, Valencia
ASM APPROPRIATIONS: 11-3-1
YES: Wicks, Arambula, Bryan, Calderon, Wendy Carrillo, Mike Fong, Friedman, Haney, Hart, Pellerin, Villapudua
NO: Sanchez, Dixon, Jim Patterson
ABS, ABST OR NV: Ta
ASSEMBLY FLOOR: 58-5-17
YES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Juan Carrillo, Wendy Carrillo, Connolly, Mike Fong, Gabriel, Garcia, Gipson, Grayson, Haney, Hart, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Stephanie Nguyen, Ortega, Pacheco, Papan, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Rodriguez, Blanca Rubio, Santiago, Soria, Ting, Valencia, Villapudua, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas
NO: Davies, Dixon, Vince Fong, Sanchez, Waldron
ABS, ABST OR NV: Calderon, Cervantes, Chen, Megan Dahle, Essayli, Flora, Friedman, Gallagher, Holden, Lackey, Mathis, Muratsuchi, Jim Patterson, Joe Patterson, Luz Rivas, Schiavo, Ta
SENATE FLOOR: 27-11-2
YES: Allen, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dodd, Durazo, Eggman, Gonzalez, Hurtado, Laird, McGuire, Menjivar, Min, Newman, Padilla, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener
NO: Alvarado-Gil, Archuleta, Dahle, Glazer, Grove, Jones, Nguyen, Niello, Ochoa Bogh, Seyarto, Wilk
ABS, ABST OR NV: Limón, Portantino
ASSEMBLY FLOOR: 57-8-14
YES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Boerner, Bonta, Bryan, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Megan Dahle, Davies, Dixon, Flora, Mike Fong, Friedman, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Pacheco, Papan, Quirk-Silva, Ramos, Luz Rivas, Rodriguez, Blanca Rubio, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Wallis, Weber, Zbur, Robert Rivas
NO: Hoover, Mathis, Jim Patterson, Joe Patterson, Sanchez, Waldron, Ward, Wicks
ABS, ABST OR NV: Berman, Calderon, Essayli, Gabriel, Holden, Stephanie Nguyen, Ortega, Pellerin, Petrie-Norris, Rendon, Reyes, Villapudua, Wilson, Wood
UPDATED
VERSION: September 5, 2024
CONSULTANT: Dori Ganetsos / H. & C.D. / (916) 319-2085 FN: 0005162
CONCURRENCE IN SENATE AMENDMENTS
CSA1 Bill Id:AB 3068
Author:(Haney)
As Amended Ver:August 23, 2024
Majority vote
SUMMARY
Establishes the Office to Housing Conversion Act (the Act), creating streamlined, ministerial approvals process for adaptive reuse projects, as defined, and providing certain financial incentives for the adaptive reuse of existing buildings.
Senate Amendments
- Establish new skilled and trained workforce provision requirements for any adaptive reuse development pursuant to the Act that includes 40 or more housing units and that includes a building taller than four stories.
- Increase the amount of time a local government may pay incentive funds to an adaptive reuse project from 15 years to 30 years.
- Exempt hotels, or any mixed-use buildings that contain hotel uses, from the Act unless they have been discontinued for at least five years prior to January 1, 2025.
- If there is a vacant hotel use proposed for adaptive reuse, it shall be subject to the existing local approvals process required by a jurisdiction, rather than the provisions of the Act.
- Allow adaptive reuse projects to occur on sites that were industrial uses provided that the building is no longer economically viable for an industrial use, as specified.
- Define "industrial uses" as utilities, manufacturing, transportation storage and maintenance facilities, warehousing uses, and any other use that is a source that is subject to permitting by a district, with certain exemptions.
- Define "project labor agreement."
- Define "urban uses" to have the same meaning as it does in AB 2011 (Wicks), Chapter 647, Statutes of 2022.
- Specify that "adjacent portion of the project" includes buildings on the same parcel as the proposed adaptive reuse project.
- Provide that a local ordinance adopted to implement this bill is not a project for the purposes of CEQA.
- Clarify that nothing prevents local governments from establishing a local adaptive reuse program, as long as the ordinance does not prohibit an applicant from using the Act.
- Remove the provisions of Government Code (GC) 65585 from this bill (those provisions are now in AB 2667 (Santiago)).
- Remove reference to "urban clusters" regarding geographic applicability and instead applies the Act instead to "urbanized areas."
- Prohibit a local government from imposing local development standards on adaptive reuse projects that would require alteration of the existing building envelope, except if alteration is needed to conform with a local building code.
- Restrict the applicability to project sites that are 20 acres or less.
- Specify that adaptive reuse projects shall not violate conservation easements.
- Clarify that the labor standards of the Affordable Housing and High Road Jobs Act of 2022 and the Middle Class Housing Act of 2022 apply if an applicant seeks to develop the adjacent lot in accordance with either of those Acts.
- Specify that a local agency must approve projects under the Office to Housing Conversion Act ministerially, whether or not it has adopted an implementation ordinance.
- Establish a 30-day local review timeframe when an adaptive reuse project is resubmitted to the local government following a determination of a conflict with one or more objective planning standards.
- Remove the local design review timeframe provisions from the Act and instead includes design review in the overall project review timeframes.
- Specify that the environmental assessment required in the bill is a condition of final approval rather than an assessment the developer must conduct prior to gaining eligibility for streamlining.
- Provide that an adaptive reuse project that does not currently include on-site automobile parking is not required to add new on-site parking.
- Provides that an adaptive reuse project that currently includes on-site parking is not required to meet local minimum parking requirements except for requirements for parking spaces for persons with disabilities and parking spaces equipped with electric vehicle charging infrastructure.
- Remove all references to the International Existing Building Code of the International Code Council, which do not apply in California.
- Provide that adaptive reuse projects are eligible for a density bonus, as specified.
- Add specificity to obligations for a project applicant and local government related to noticing and preserving historical resources such as building facades and interior character defining spaces in a manner consistent with federal standards.
- Make the environmentally sensitive site criteria consistent with the criteria in AB 2243 (Wicks) with respect to applicability in the Coastal Zone.
- Add findings and declarations.
- Make other technical changes.
COMMENTS
Statewide Housing Needs: California's housing crisis is a half-century in the making. After decades of underproduction, housing supply is far behind need, and housing costs are soaring. California must plan for more than 2.5 million new homes, and no less than one million of those homes must be affordable to lower-income households, by 2030.
Cost of building housing: It is expensive to build housing in California. The UC Berkeley Terner Center finds that challenging macroeconomic conditions, including inflation and high interest rates, affect the availability and cost of capital, resulting in rising costs for labor and materials. Furthermore, workforce and supply shortages have exacerbated the already high price of construction in California, and economic uncertainty has made equity partners and lenders apprehensive about financing new housing development proposals.
The cost of the labor required to build affordable housing in California are one of the factors that contribute to overall construction costs. The Terner Center's 2024 paper, Low-Income Housing Tax Credit Construction Costs: An Analysis of Prevailing Wages, provides insights into how prevailing wage requirements in particular impact construction costs. Prevailing wage requirements are regulations that mandate the minimum wage rates and benefits that must be paid to workers. These wage rates are typically set to reflect the wages and benefits that are commonly paid to workers in a specific area or region for similar work, often aligned with union-scale wages. The study found that LIHTC developments studied that were built with prevailing wage requirements cost an estimated $94,000 more per unit compared to projects developed without paying prevailing wages, though there is wide variability in the sample.[1] The authors also note that the mere presence of a prevailing wage requirement was not the only factor that resulted in that overall cost variability. Nonetheless, these requirements can contribute to the total expense of building housing, particularly affordable housing which already face cost constraints when it comes to making a development financially feasible. This bill would require prevailing wage to be paid for all adaptive reuse projects under the Act, consistent with the provisions of the Affordable Housing and High Road Jobs Act of 2022 (AB 2011, (Wicks), Chapter 647, Statutes of 2022). This requirement was taken in the Assembly Committee on Housing and Community Development to conform to the labor standards in prior streamlining bills.
In addition to the prevailing wage requirements, amendments taken by the author in the Senate on August 23, 2024 would further require all projects with more than 40 units in buildings with more than 4 stories to use "skilled and trained" workforce provisions. These requirements mandate that a certain percentage of the workers on a project be graduates of a state-approved apprenticeship program or possess equivalent training and qualifications. While these are noble goals, the “skilled and trained” mandates may make these already expensive projects cost-prohibitive for affordable housing developers. This requirement is especially difficult to navigate in rural and inland areas of the state that struggle to find an eligible workforce that meets these standards.
Adaptive Reuse: Adaptive reuse is the process of converting an existing non-residential building to housing. The ability to adaptively reuse a building is dependent on the initial design. For example, warehouses and big box retail could not functionally be adaptively reused, because their tall ceilings, single stories, and rudimentary plumbing would need to be completely reconstituted to be appropriate for human habitation. Office buildings maintain some potential for conversion, however, the large floor plate configuration of most office buildings makes it difficult to provide the light and air required for residential units throughout the building. It is not uncommon for unexpected hurdles to appear in adaptive reuse projects, adding time and cost. For these conversions to occur, it must be financially attractive to the property owner – something that has increased due to the downturn in the downtown office market since the COVID-19 pandemic.
The buildings most readily converted to housing are hotels and motels. These uses are already divided into quarters designed for short-term human habitation, and units can readily be converted to housing with the addition of kitchens. The viability of this conversion is visible in the success of Homekey, which created over 15,000 homes to date, with a cost of approximately $306,000 per unit - substantially less than the current cost to build newly constructed housing. Notably, this bill would not allow for the conversion of hotels unless those buildings were vacant for 5 years prior to the bills effective date, should it pass.
This bill would make the adaptive reuse of existing buildings mixed-use projects an allowable use in infill areas. This bill would allow for the new construction of mixed-use developments on vacant or underutilized parcels adjacent to an adaptive reuse project. Local governments would be required to approve a project that met the bill's specifications in an expedited timeframe.
Adaptive Reuse Funding: The Legislature has taken multiple actions to support adaptive reuse. HCD's Homekey program has allocated approximately $3.5 billion to convert hotels and motels to housing Californians at risk of, or experiencing, homelessness. The 2022-2023 budget included a $450 million General Fund allocation to convert existing buildings to affordable housing. AB 1695 (Santiago, Chapter 639, Statutes of 2022) requires any notice of funding availability issued by HCD for an affordable multifamily housing program to include adaptive reuse as an eligible activity. SB 451 (Atkins, Chapter 703, Statutes of 2019), established a $50 million program to facilitate the rehabilitation, including adaptive reuse, of historic buildings.
To help offset the costs associated with adaptive reuse projects, this bill would provide financial incentives for adaptive reuse projects by authorizing local agencies to establish an Adaptive Reuse Investment Incentive Program, through which an amount up to or equal to 30 years' worth of the amount of ad valorem property tax revenues could be transferred to the owners of projects to subsidize the affordability requirements. It would also align program requirements to encourage the utilization of existing programs state and federal programs. The bill would also limit a local government's ability to charge impact fees for projects that are not directly related to the impacts resulting from the change of use of the site from nonresidential to residential.
According to the Author
"Office vacancies across the state have hit record highs with Los Angeles and San Francisco both reaching over 30% vacancy rates. Many economists are theorizing that unless local and state governments act quickly, downtowns may be facing a doom-loop scenario with empty, devalued buildings leading to a severe decrease in local government tax bases, leading to decreased services and blight…Office to housing conversion is a win-win scenario that builds housing, preserves historic buildings, and creates new thriving communities in transit rich areas. California needs to get out of its own way and make office to housing conversions as easy as humanly possible. This bill does exactly that."
Arguments in Support
According to the California Preservation Foundation, the bill sponsor, “AB 3068 presents a unique opportunity to shape the future of California’s communities while honoring our architectural heritage. With the state facing a significant housing shortfall, adaptive reuse offers a practical solution to repurpose vacant commercial buildings for residential and mixed-use purposes. This approach not only stimulates economic development but also serves as an environmentally sustainable alternative to new construction, significantly reducing the carbon footprint associated with building materials and energy consumption.”
Arguments in Opposition
The California Housing Partnership, California Housing Consortium, and Housing California write in opposition: "We were dismayed to see AB 3068's recent amendments, which added 'skilled and trained' workforce mandates to its provisions. Evidence clearly demonstrates that 'skilled and trained' requirements drive up the cost of housing projects, making them cost-prohibitive for affordable housing developers, who already struggle to put the financing they need together. The mandate is even more unnavigable in rural and inland areas of the state that already struggle to find an eligible workforce that meets these standards."
FISCAL COMMENTS
None
VOTES:
ASM HOUSING AND COMMUNITY DEVELOPMENT: 9-0-0
YES: Ward, Joe Patterson, Grayson, Kalra, Lee, Quirk-Silva, Reyes, Sanchez, Wilson
ASM LOCAL GOVERNMENT: 6-1-2
YES: Juan Carrillo, Kalra, Pacheco, Ramos, Ward, Wilson
NO: Waldron
ABS, ABST OR NV: Essayli, Valencia
ASM APPROPRIATIONS: 11-3-1
YES: Wicks, Arambula, Bryan, Calderon, Wendy Carrillo, Mike Fong, Friedman, Haney, Hart, Pellerin, Villapudua
NO: Sanchez, Dixon, Jim Patterson
ABS, ABST OR NV: Ta
ASSEMBLY FLOOR: 58-5-17
YES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Juan Carrillo, Wendy Carrillo, Connolly, Mike Fong, Gabriel, Garcia, Gipson, Grayson, Haney, Hart, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Stephanie Nguyen, Ortega, Pacheco, Papan, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Rodriguez, Blanca Rubio, Santiago, Soria, Ting, Valencia, Villapudua, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas
NO: Davies, Dixon, Vince Fong, Sanchez, Waldron
ABS, ABST OR NV: Calderon, Cervantes, Chen, Megan Dahle, Essayli, Flora, Friedman, Gallagher, Holden, Lackey, Mathis, Muratsuchi, Jim Patterson, Joe Patterson, Luz Rivas, Schiavo, Ta
SENATE FLOOR: 27-11-2
YES: Allen, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dodd, Durazo, Eggman, Gonzalez, Hurtado, Laird, McGuire, Menjivar, Min, Newman, Padilla, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener
NO: Alvarado-Gil, Archuleta, Dahle, Glazer, Grove, Jones, Nguyen, Niello, Ochoa Bogh, Seyarto, Wilk
ABS, ABST OR NV: Limón, Portantino
UPDATED
VERSION: August 23, 2024
CONSULTANT: Dori Ganetsos / H. & C.D. / (916) 319-2085 FN: 0005036
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB 3068 |
THIRD READING
Bill No: AB 3068
Author: Haney (D), et al.
Amended: 8/23/24 in Senate
Vote: 21
SENATE LOCAL GOVERNMENT COMMITTEE: 4-3, 6/11/24
AYES: Durazo, Skinner, Wahab, Wiener
NOES: Seyarto, Dahle, Glazer
SENATE HOUSING COMMITTEE: 8-2, 7/2/24
AYES: Skinner, Blakespear, Caballero, Cortese, Menjivar, Padilla, Umberg, Wahab
NOES: Ochoa Bogh, Seyarto
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SENATE LOCAL GOVERNMENT COMMITTEE: 4-1, 8/27/24 (Pursuant to Senate Rule 29.10)
AYES: Durazo, Skinner, Wahab, Wiener
NOES: Seyarto
NO VOTE RECORDED: Dahle, Glazer
ASSEMBLY FLOOR: 58-5, 5/22/24 - See last page for vote
SUBJECT: Adaptive reuse: streamlining: incentives
SOURCE: YIMBY Action
DIGEST:
This bill enacts the Office to Housing Conversion Act, which creates a streamlined, ministerial approval process for adaptive reuse projects and provides certain financial incentives for the adaptive reuse of existing buildings.
Senate Floor Amendments of 8/23/24 revise the labor language to require the use of a skilled and trained workforce for projects that include both more than 40 units and a building of more than four stories in height, shorten the time that local governments have to approve consistent projects, and make other changes.
ANALYSIS:
Existing law:
- Allows, pursuant to the California Constitution, cities and counties to “make and enforce within its limits, all local, police, sanitary and other ordinances and regulations not in conflict with general laws.” It is from this fundamental power (commonly called the police power) that cities and counties derive their authority to regulate behavior to preserve the health, safety, and welfare of the public—including land use authority.
- Requires every county and city to adopt a general plan that sets out planned uses for all of the area that it covers.
- Establishes, pursuant to AB 1490 (Lee, Chapter 764, Statutes of 2023), a ministerial, streamlined approval process for the adaptive reuse of buildings into 100 percent affordable housing.
- Establishes, pursuant to SB 423 (Wiener, Chapter 778, Statutes of 2023), a streamlined, ministerial approval process for certain infill multifamily affordable housing projects that are compliant with local zoning and objective standards and that are proposed in local jurisdictions that have not met their regional housing needs allocation.
- Establishes, pursuant to AB 2011 (Wicks, Chapter 647, Statutes of 2022), a streamlined, ministerial approval process for certain infill multifamily affordable housing projects that are located on land that is zoned for retail, office, or parking.
- Allows, pursuant to SB 6 (Caballero Chapter 659, Statutes of 2022), the Middle Class Housing Act of 2022, residential uses on commercially zoned property without requiring a rezoning.
- Authorizes the California Department of Housing and Community Development (HCD) to enforce state housing laws.
This bill:
- Deems an adaptive reuse project that meets the requirements of the bill a use by right in all zones and establishes a streamlined, ministerial review process for these projects, as specified below.
Site requirements
- An adaptive reuse project must be located on an infill site, as specified, and be for an existing building that is one of the following:
- Less than 50 years old.
- Listed on a local, state, or federal register of historic resources and the adaptive reuse project proponent complies with specified historic resource protection requirements described below.
- The project is proposed for an existing building and the local government has evaluated the site as specified and determined that the building or site is either: (1) a historic resource and the adaptive reuse project proponent complies with the historic resource protection requirements; or (2) not a historic resource.
- The proponent must complete a specified environmental assessment and avoid or mitigate specified environmental harms.
- If the adaptive reuse project includes mixed uses, at least one-half of the square footage of the adaptive reuse project must be dedicated to residential uses.
- Prohibits a project from violating the terms of any conservation easement applicable to the site.
- Prescribes the operation of density bonus law relative to these projects, including to specify that a project is not eligible for a density bonus waiver or incentive that has the effect of increasing the height of the adaptively reused building above what is allowed by the bill.
- Prohibits hotels from being included in the projects streamlined by the bill.
- Limits the acreage of the project site to 20 acres.
Historic resource protection requirements
- Prior to submitting an application for an adaptive reuse project for a structure that is more than 50 years old and not listed on a local, state, or federal register of historic resources, the development proponent must submit to the local government a notice of its intent to submit an application, as specified.
- If the adaptive reuse project is proposed for an existing building that is listed on a local, state, or federal register of historic resources, or if the local government has determined that the project site is a significant historic resource, the adaptive reuse project proponent must declare that the project will only move forward if it complies with specified federal standards for rehabilitation of a historic structure.
Affordability requirements
- Requires an adaptive reuse project to meet specified affordability requirements, generally that the project provide:
- At least 8 percent of the units for very low income households and 5 percent of the units for extremely low income households, or 15 percent for lower income households, for rental projects.
- 30 percent for moderate income households, or 15 percent for lower income households, for ownership projects.
Labor standards
- Requires that all the following standards will be met in project construction:
- A development that is not in its entirety a public work must meet the following wage provisions:
- All construction workers employed in the execution of the development must be paid prevailing wage.
- The development proponent must ensure the prevailing wage requirement is included in all contracts for the performance of the work for those portions of the development that are not a public work.
- All contractors and subcontractors for those portions of the development that are not a public work must maintain and verify payroll records, and make those records available for inspection and copying.
- A development that is not in its entirety a public work must meet the following wage provisions:
- For projects of 40 or more housing units that do not include a building of more than four stories, requires the project proponent to use contractors that:
- Participated in an apprenticeship program.
- Meet minimum health care expenditure requirements.
- For projects of 40 or more units that include a building of more than four stories, requires the use of a skilled and trained workforce at every tier of the project.
- Exempts from specified aspects of the requirements noted above the portions of the project that are subject to a bona fide collective bargaining agreement or a project labor agreement that meets specified requirements.
- Subjects the development proponent to monthly compliance reporting with the labor standards above, and other reporting and disclosure requirements regarding payroll records, the apprenticeship program participation, and health care requirements.
- Imposes specified penalties for failing to provide reports or comply with labor standards.
- Allows a local government may also take administrative action against or sue a construction contractor for failure to comply with the skilled and trained workforce requirements, and to issue a stop notice to halt further work on the project or revoke a building permit if the general contractor on the project doesn’t meet the requirements of the bill.
Additional structures
- Allows an adaptive reuse project to include the development of new residential or mixed-use structures on undeveloped areas and parking areas on the parcel for the site or the parcels adjacent to the proposed adaptive reuse project site if project is on an infill site, meets specified objective standards and environmental criteria, is not a historic resource, and the applicant and local agency follow procedures for identifying impacts to tribal cultural resources.
Approval process
- Requires a city or county to approve an adaptive reuse project if the local planning director or equivalent position determines that the project is consistent with the objective planning standards in the bill, and specifies timelines for the planning director to conduct design review and make the determination based on project size.
- Specifies that if the planning director fails to make a determination as specified, the project shall be deemed to comply with the objective standards. Additionally the bill provides that a project shall be considered consistent with the applicable objective planning standards if there is substantial evidence that would allow a reasonable person to conclude the project is consistent with the standards, as specified.
- Specifies that if a project involves subdividing the property into smaller parcels, the application for a subdivision is not subject to CEQA if the adaptive reuse project is consistent with specified requirements and all objective subdivision standards in the local subdivision ordinance, and establishes review timelines.
- Prohibits a city or county from requiring:
- Additional studies that aren’t directly related to evaluating compliance with the objective standards.
- Compliance with specified postentitlement permits at the planning stage, but provides that those requirements can be imposes later in the approval process.
- Changes to the building’s envelope unless required to comply with the building code.
- Provides that it doesn’t preempt the adoption and implementation of a local ordinance that provides alternative procedures and substantive requirements for adaptive reuse projects, provided that the local ordinance does not prohibit an applicant from electing to use the bill.
Impact fee.
- Exempts an adaptive reuse project from all impact fees that are not reasonably related to the impacts resulting from the change of use of the site from nonresidential to residential or mixed use, and any fees charged must be roughly proportional to the difference in impacts caused by the change of use.
Adaptive reuse investment incentive program (ARIIP)
- Allows a city or county to offer financial incentives for up to 30 years to subsidize affordable units that are part of an adaptive reuse project under the bill.
- A project proponent applies to the city or county by filing a request, which must be approved by a majority vote of the city or county’s governing body for payments to commence. If approved, a proponent receives a payment equal to the amount of property taxes paid and received by that city or county that is in excess of the adaptive reuse project property’s valuation at the time of the proponent’s initial request for funding.
Other provisions and enforcement
- Allows a city or county to adopt an ordinance that is consistent with the requirements of the bill, as specified. A local agency cannot impose any requirements on the basis that the project is eligible for approval under the bill. An ordinance adopted by a local government to implement the bill is not a project for the purposes of the California Environmental Quality Act.
- Requires a local government that doesn’t adopt an ordinance to ministerially approve applications pursuant to the bill.
- Specifies that a project can use other applicable ministerial streamlining laws, and can benefit from the protections of the Housing Accountability Act.
- Defines its terms.
- Includes findings and declarations to support its purpose.
Background
Adaptive Reuse. According to an April 24, 2020, brief published by McKinsey and Company, the onset of COVID-19 has aggravated the existing challenges that the retail sector faces, including:
- A shift to online purchasing over brick-and-mortar sales;
- Customers seeking safe and healthy purchasing options;
- Increased emphasis on value for money when purchasing goods;
- Movement towards more flexible and versatile labor; and
- Reduced consumer loyalty in favor of less expensive brands.
As the shift away from traditional office and retail uses accelerates, interest has grown in “adaptive reuse”—the process of converting an existing non-residential building to housing. Adaptive reuse is not a new concept: in 1999, the City of Los Angeles adopted an Adaptive Reuse Ordinance (ARO) to revitalize underused buildings within the city's downtown area by facilitating the conversion of existing commercial buildings into residential or mixed-use properties. By easing some zoning requirements, the ARO enabled developers to transform vacant or underutilized office buildings, theaters, and other commercial structures into residential units.
However, adaptive reuse is not without its challenges. According to a 2021 report by the Terner Center for Housing Innovation, Adaptive Reuse Challenges and Opportunities in California: “the potential of adaptive reuse is contingent upon numerous different factors, including architectural considerations related to the existing structure, political and legislative constraints, and issues surrounding economic feasibility.” The report notes light and ventilation requirements differ between commercial and residential uses, which are often fundamental features of the existing structure that may not be easily modified, and bringing older buildings up to current residential codes can be rife with undiscovered challenges, which increase costs. It also states, “streamlining approvals and minimizing parking requirements can significantly increase the feasibility of adaptive reuse projects by reducing risk and costs of conversion. Reducing parking can lead to an increase in the number of units that the project can support. … Not requiring additional parking also eliminates a barrier to adaptive reuse projects, especially within dense urban areas with no physical space to locate any new parking stalls.”
Some housing supply advocates want to make it easier to convert existing buildings to residential uses.
Comments
- Purpose of the bill. According to the author, “COVID-19 permanently altered the way humans approach work. In the post pandemic era, many businesses realized that developments in technology allow them to move away from the 9 to 5, commuter model that kept downtown office buildings full of people during the work week. As the capital of technological innovation, California has been particularly impacted by this transition as more and more tech companies shift to offering remote work as a benefit to their employees.
“A major downside to this transition is California’s emptying downtown business districts. Office vacancies across the state have hit record highs with Los Angeles and San Francisco both reaching over 30% vacancy rates. Many economists are theorizing that unless local and state governments act quickly, downtowns may be facing a doom-loop scenario with empty, devalued buildings leading to a severe decrease in local government tax bases, leading to decreased services and blight.
“Converting vacant office buildings into new residential units will not only stop doom-loop scenarios, it will also revitalize and enliven business districts that often became ghost towns after 5pm. California also continues to suffer from a statewide housing shortage – to address this local governments must plan for the production of more than 2.5 million homes in the next several years.
“Office to housing conversion is a win-win scenario that builds housing, preserves historic buildings, and creates new thriving communities in transit rich areas. California needs to get out of its own way and make office to housing conversions as easy as humanly possible. This bill does exactly that.”
- Home rule. A fundamental principle of zoning since the United States Supreme Court upheld an early zoning ordinance in 1926 (Village of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926)) has been that allowing some uses in one area but prohibiting others can be integral to protecting the public welfare. Local governments have historically separated uses to avoid siting incompatible activities, such as industrial and residential activity, near one another. It also mitigates potential public health issues, such as air pollution impacts from heavy industrial uses on nearby residents. AB 3068 makes housing a use by right on properties that were originally sited in non-residential zones, which contravenes this principle. It also undermines the planning decisions made by local officials, who established which uses are allowed and at what intensity. Specifically, some jurisdictions, including the cities of Sacramento and Los Angeles, have enacted adaptive reuse ordinances of their own. Should the state tell local governments to approve this type of residential use in places where local governments have yet to say it’s appropriate?
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes
SUPPORT: (Verified 8/30/24)
YIMBY Action (source)
Abundant Housing LA
Advance Sf
Aids Healthcare Foundation
Bay Area Council
California Apartment Association
California Community Builders
California Preservation Foundation
Circulate San Diego
Civicwell
East Bay Yimby
Greenlining Institute; the
Grow the Richmond
Housing Trust Silicon Valley
International Interior Design Association Northern California Chapter
International Interior Design Association Southern California Chapter
Leadingage California
Mountain View Yimby
Napa-Solano for Everyone
Northern Neighbors
Peninsula for Everyone
Progress Noe Valley
San Francisco Yimby
San Luis Obispo Yimby
Santa Cruz Yimby
Santa Rosa Yimby
South Bay Yimby
Southside Forward
Spur
State Building and Construction Trades Council
Streets for All
Streets for People
Urban Environmentalists
Ventura County Yimby
OPPOSITION: (Verified 8/30/24)
California Building Industry Association
California Contract Cities Association
California Housing Consortium
California Housing Partnership
California YIMBY
City of Santa Clarita
City of Thousand Oaks
Fieldstead and Company
Housing Action Coalition
Housing California
League of California Cities
Western Electrical Contractors
ASSEMBLY FLOOR: 58-5, 5/22/24
AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Juan Carrillo, Wendy Carrillo, Connolly, Mike Fong, Gabriel, Garcia, Gipson, Grayson, Haney, Hart, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Stephanie Nguyen, Ortega, Pacheco, Papan, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Rodriguez, Blanca Rubio, Santiago, Soria, Ting, Valencia, Villapudua, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas
NOES: Davies, Dixon, Vince Fong, Sanchez, Waldron
NO VOTE RECORDED: Calderon, Cervantes, Chen, Megan Dahle, Essayli, Flora, Friedman, Gallagher, Holden, Lackey, Mathis, Muratsuchi, Jim Patterson, Joe Patterson, Luz Rivas, Schiavo, Ta
Prepared by: Anton Favorini-Csorba / L. GOV. / (916) 651-4119
8/30/24 10:26:06
**** END ****
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB 3068 |
THIRD READING
Bill No: AB 3068
Author: Haney (D), et al.
Amended: 8/23/24 in Senate
Vote: 21
SENATE LOCAL GOVERNMENT COMMITTEE: 4-3, 6/11/24
AYES: Durazo, Skinner, Wahab, Wiener
NOES: Seyarto, Dahle, Glazer
SENATE HOUSING COMMITTEE: 8-2, 7/2/24
AYES: Skinner, Blakespear, Caballero, Cortese, Menjivar, Padilla, Umberg, Wahab
NOES: Ochoa Bogh, Seyarto
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SENATE LOCAL GOVERNMENT COMMITTEE: 4-1, 8/27/24 (Pursuant to Senate Rule 29.10)
AYES: Durazo, Skinner, Wahab, Wiener
NOES: Seyarto
NO VOTE RECORDED: Dahle, Glazer
ASSEMBLY FLOOR: 58-5, 5/22/24 - See last page for vote
SUBJECT: Adaptive reuse: streamlining: incentives
SOURCE: Author
DIGEST:
This bill enacts the Office to Housing Conversion Act, which creates a streamlined, ministerial approval process for adaptive reuse projects and provides certain financial incentives for the adaptive reuse of existing buildings.
Senate Floor Amendments of 8/23/24 revise the labor language to require the use of a skilled and trained workforce for projects that include both more than 40 units and a building of more than four stories in height, shorten the time that local governments have to approve consistent projects, and make other changes.
ANALYSIS:
Existing law:
- Allows, pursuant to the California Constitution, cities and counties to “make and enforce within its limits, all local, police, sanitary and other ordinances and regulations not in conflict with general laws.” It is from this fundamental power (commonly called the police power) that cities and counties derive their authority to regulate behavior to preserve the health, safety, and welfare of the public—including land use authority.
- Requires every county and city to adopt a general plan that sets out planned uses for all of the area that it covers.
- Establishes, pursuant to AB 1490 (Lee, Chapter 764, Statutes of 2023), a ministerial, streamlined approval process for the adaptive reuse of buildings into 100 percent affordable housing.
- Establishes, pursuant to SB 423 (Wiener, Chapter 778, Statutes of 2023), a streamlined, ministerial approval process for certain infill multifamily affordable housing projects that are compliant with local zoning and objective standards and that are proposed in local jurisdictions that have not met their regional housing needs allocation.
- Establishes, pursuant to AB 2011 (Wicks, Chapter 647, Statutes of 2022), a streamlined, ministerial approval process for certain infill multifamily affordable housing projects that are located on land that is zoned for retail, office, or parking.
- Allows, pursuant to SB 6 (Caballero Chapter 659, Statutes of 2022), the Middle Class Housing Act of 2022, residential uses on commercially zoned property without requiring a rezoning.
- Authorizes the California Department of Housing and Community Development (HCD) to enforce state housing laws.
This bill:
- Deems an adaptive reuse project that meets the requirements of the bill a use by right in all zones and establishes a streamlined, ministerial review process for these projects, as specified below.
Site requirements
- An adaptive reuse project must be located on an infill site, as specified, and be for an existing building that is one of the following:
- Less than 50 years old.
- Listed on a local, state, or federal register of historic resources and the adaptive reuse project proponent complies with specified historic resource protection requirements described below.
- The project is proposed for an existing building and the local government has evaluated the site as specified and determined that the building or site is either: (1) a historic resource and the adaptive reuse project proponent complies with the historic resource protection requirements; or (2) not a historic resource.
- The proponent must complete a specified environmental assessment and avoid or mitigate specified environmental harms.
- If the adaptive reuse project includes mixed uses, at least one-half of the square footage of the adaptive reuse project must be dedicated to residential uses.
- Prohibits a project from violating the terms of any conservation easement applicable to the site.
- Prescribes the operation of density bonus law relative to these projects, including to specify that a project is not eligible for a density bonus waiver or incentive that has the effect of increasing the height of the adaptively reused building above what is allowed by the bill.
- Prohibits hotels from being included in the projects streamlined by the bill.
- Limits the acreage of the project site to 20 acres.
Historic resource protection requirements
- Prior to submitting an application for an adaptive reuse project for a structure that is more than 50 years old and not listed on a local, state, or federal register of historic resources, the development proponent must submit to the local government a notice of its intent to submit an application, as specified.
- If the adaptive reuse project is proposed for an existing building that is listed on a local, state, or federal register of historic resources, or if the local government has determined that the project site is a significant historic resource, the adaptive reuse project proponent must declare that the project will only move forward if it complies with specified federal standards for rehabilitation of a historic structure.
Affordability requirements
- Requires an adaptive reuse project to meet specified affordability requirements, generally that the project provide:
- At least 8 percent of the units for very low income households and 5 percent of the units for extremely low income households, or 15 percent for lower income households, for rental projects.
- 30 percent for moderate income households, or 15 percent for lower income households, for ownership projects.
Labor standards
- Requires that all the following standards will be met in project construction:
- A development that is not in its entirety a public work must meet the following wage provisions:
- All construction workers employed in the execution of the development must be paid prevailing wage.
- The development proponent must ensure the prevailing wage requirement is included in all contracts for the performance of the work for those portions of the development that are not a public work.
- All contractors and subcontractors for those portions of the development that are not a public work must maintain and verify payroll records, and make those records available for inspection and copying.
- A development that is not in its entirety a public work must meet the following wage provisions:
- For projects of 40 or more housing units that do not include a building of more than four stories, requires the project proponent to use contractors that:
- Participated in an apprenticeship program.
- Meet minimum health care expenditure requirements.
- For projects of 40 or more units that include a building of more than four stories, requires the use of a skilled and trained workforce at every tier of the project.
- Exempts from specified aspects of the requirements noted above the portions of the project that are subject to a bona fide collective bargaining agreement or a project labor agreement that meets specified requirements.
- Subjects the development proponent to monthly compliance reporting with the labor standards above, and other reporting and disclosure requirements regarding payroll records, the apprenticeship program participation, and health care requirements.
- Imposes specified penalties for failing to provide reports or comply with labor standards.
- Allows a local government may also take administrative action against or sue a construction contractor for failure to comply with the skilled and trained workforce requirements, and to issue a stop notice to halt further work on the project or revoke a building permit if the general contractor on the project doesn’t meet the requirements of the bill.
Additional structures
- Allows an adaptive reuse project to include the development of new residential or mixed-use structures on undeveloped areas and parking areas on the parcel for the site or the parcels adjacent to the proposed adaptive reuse project site if project is on an infill site, meets specified objective standards and environmental criteria, is not a historic resource, and the applicant and local agency follow procedures for identifying impacts to tribal cultural resources.
Approval process
- Requires a city or county to approve an adaptive reuse project if the local planning director or equivalent position determines that the project is consistent with the objective planning standards in the bill, and specifies timelines for the planning director to conduct design review and make the determination based on project size.
- Specifies that if the planning director fails to make a determination as specified, the project shall be deemed to comply with the objective standards. Additionally the bill provides that a project shall be considered consistent with the applicable objective planning standards if there is substantial evidence that would allow a reasonable person to conclude the project is consistent with the standards, as specified.
- Specifies that if a project involves subdividing the property into smaller parcels, the application for a subdivision is not subject to CEQA if the adaptive reuse project is consistent with specified requirements and all objective subdivision standards in the local subdivision ordinance, and establishes review timelines.
- Prohibits a city or county from requiring:
- Additional studies that aren’t directly related to evaluating compliance with the objective standards.
- Compliance with specified postentitlement permits at the planning stage, but provides that those requirements can be imposes later in the approval process.
- Changes to the building’s envelope unless required to comply with the building code.
- Provides that it doesn’t preempt the adoption and implementation of a local ordinance that provides alternative procedures and substantive requirements for adaptive reuse projects, provided that the local ordinance does not prohibit an applicant from electing to use the bill.
Impact fee.
- Exempts an adaptive reuse project from all impact fees that are not reasonably related to the impacts resulting from the change of use of the site from nonresidential to residential or mixed use, and any fees charged must be roughly proportional to the difference in impacts caused by the change of use.
Adaptive reuse investment incentive program (ARIIP)
- Allows a city or county to offer financial incentives for up to 30 years to subsidize affordable units that are part of an adaptive reuse project under the bill.
- A project proponent applies to the city or county by filing a request, which must be approved by a majority vote of the city or county’s governing body for payments to commence. If approved, a proponent receives a payment equal to the amount of property taxes paid and received by that city or county that is in excess of the adaptive reuse project property’s valuation at the time of the proponent’s initial request for funding.
Other provisions and enforcement
- Allows a city or county to adopt an ordinance that is consistent with the requirements of the bill, as specified. A local agency cannot impose any requirements on the basis that the project is eligible for approval under the bill. An ordinance adopted by a local government to implement the bill is not a project for the purposes of the California Environmental Quality Act.
- Requires a local government that doesn’t adopt an ordinance to ministerially approve applications pursuant to the bill.
- Specifies that a project can use other applicable ministerial streamlining laws, and can benefit from the protections of the Housing Accountability Act.
- Defines its terms.
- Includes findings and declarations to support its purpose.
Background
Adaptive Reuse. According to an April 24, 2020, brief published by McKinsey and Company, the onset of COVID-19 has aggravated the existing challenges that the retail sector faces, including:
- A shift to online purchasing over brick-and-mortar sales;
- Customers seeking safe and healthy purchasing options;
- Increased emphasis on value for money when purchasing goods;
- Movement towards more flexible and versatile labor; and
- Reduced consumer loyalty in favor of less expensive brands.
As the shift away from traditional office and retail uses accelerates, interest has grown in “adaptive reuse”—the process of converting an existing non-residential building to housing. Adaptive reuse is not a new concept: in 1999, the City of Los Angeles adopted an Adaptive Reuse Ordinance (ARO) to revitalize underused buildings within the city's downtown area by facilitating the conversion of existing commercial buildings into residential or mixed-use properties. By easing some zoning requirements, the ARO enabled developers to transform vacant or underutilized office buildings, theaters, and other commercial structures into residential units.
However, adaptive reuse is not without its challenges. According to a 2021 report by the Terner Center for Housing Innovation, Adaptive Reuse Challenges and Opportunities in California: “the potential of adaptive reuse is contingent upon numerous different factors, including architectural considerations related to the existing structure, political and legislative constraints, and issues surrounding economic feasibility.” The report notes light and ventilation requirements differ between commercial and residential uses, which are often fundamental features of the existing structure that may not be easily modified, and bringing older buildings up to current residential codes can be rife with undiscovered challenges, which increase costs. It also states, “streamlining approvals and minimizing parking requirements can significantly increase the feasibility of adaptive reuse projects by reducing risk and costs of conversion. Reducing parking can lead to an increase in the number of units that the project can support. … Not requiring additional parking also eliminates a barrier to adaptive reuse projects, especially within dense urban areas with no physical space to locate any new parking stalls.”
Some housing supply advocates want to make it easier to convert existing buildings to residential uses.
Comments
- Purpose of the bill. According to the author, “COVID-19 permanently altered the way humans approach work. In the post pandemic era, many businesses realized that developments in technology allow them to move away from the 9 to 5, commuter model that kept downtown office buildings full of people during the work week. As the capital of technological innovation, California has been particularly impacted by this transition as more and more tech companies shift to offering remote work as a benefit to their employees.
“A major downside to this transition is California’s emptying downtown business districts. Office vacancies across the state have hit record highs with Los Angeles and San Francisco both reaching over 30% vacancy rates. Many economists are theorizing that unless local and state governments act quickly, downtowns may be facing a doom-loop scenario with empty, devalued buildings leading to a severe decrease in local government tax bases, leading to decreased services and blight.
“Converting vacant office buildings into new residential units will not only stop doom-loop scenarios, it will also revitalize and enliven business districts that often became ghost towns after 5pm. California also continues to suffer from a statewide housing shortage – to address this local governments must plan for the production of more than 2.5 million homes in the next several years.
“Office to housing conversion is a win-win scenario that builds housing, preserves historic buildings, and creates new thriving communities in transit rich areas. California needs to get out of its own way and make office to housing conversions as easy as humanly possible. This bill does exactly that.”
- Home rule. A fundamental principle of zoning since the United States Supreme Court upheld an early zoning ordinance in 1926 (Village of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926)) has been that allowing some uses in one area but prohibiting others can be integral to protecting the public welfare. Local governments have historically separated uses to avoid siting incompatible activities, such as industrial and residential activity, near one another. It also mitigates potential public health issues, such as air pollution impacts from heavy industrial uses on nearby residents. AB 3068 makes housing a use by right on properties that were originally sited in non-residential zones, which contravenes this principle. It also undermines the planning decisions made by local officials, who established which uses are allowed and at what intensity. Specifically, some jurisdictions, including the cities of Sacramento and Los Angeles, have enacted adaptive reuse ordinances of their own. Should the state tell local governments to approve this type of residential use in places where local governments have yet to say it’s appropriate?
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes
SUPPORT: (Verified 8/30/24)
Abundant Housing LA
Advance Sf
Aids Healthcare Foundation
Bay Area Council
California Community Builders
California Preservation Foundation
Circulate San Diego
Civicwell
East Bay Yimby
Greenlining Institute; the
Grow the Richmond
Housing Trust Silicon Valley
International Interior Design Association Northern California Chapter
International Interior Design Association Southern California Chapter
Leadingage California
Mountain View Yimby
Napa-Solano for Everyone
Northern Neighbors
Peninsula for Everyone
Progress Noe Valley
San Francisco Yimby
San Luis Obispo Yimby
Santa Cruz Yimby
Santa Rosa Yimby
South Bay Yimby
Southside Forward
Spur
State Building and Construction Trades Council
Streets for All
Streets for People
Urban Environmentalists
Ventura County Yimby
OPPOSITION: (Verified 8/30/24)
California Building Industry Association
California Contract Cities Association
California Housing Consortium
California Housing Partnership
California YIMBY
City of Santa Clarita
City of Thousand Oaks
Fieldstead and Company
Housing Action Coalition
Housing California
League of California Cities
Western Electrical Contractors
ASSEMBLY FLOOR: 58-5, 5/22/24
AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Juan Carrillo, Wendy Carrillo, Connolly, Mike Fong, Gabriel, Garcia, Gipson, Grayson, Haney, Hart, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Stephanie Nguyen, Ortega, Pacheco, Papan, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Rodriguez, Blanca Rubio, Santiago, Soria, Ting, Valencia, Villapudua, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas
NOES: Davies, Dixon, Vince Fong, Sanchez, Waldron
NO VOTE RECORDED: Calderon, Cervantes, Chen, Megan Dahle, Essayli, Flora, Friedman, Gallagher, Holden, Lackey, Mathis, Muratsuchi, Jim Patterson, Joe Patterson, Luz Rivas, Schiavo, Ta
Prepared by: Anton Favorini-Csorba / L. GOV. / (916) 651-4119
8/30/24 11:27:21
**** END ****
SENATE COMMITTEE ON LOCAL GOVERNMENT
Senator María Elena Durazo, Chair
2023 - 2024 Regular
Pursuant to Rule 29.10(b)
Bill No: | AB 3068 | Hearing Date: | 8/27/24 |
Author: | Haney | Fiscal: | Yes |
Version: | 8/23/24 | Consultant: | Favorini-Csorba |
Adaptive reuse: streamlining: incentives
Enacts the Office to Housing Conversion Act, which creates a streamlined, ministerial approval process for adaptive reuse projects and provides certain financial incentives for the adaptive reuse of existing buildings.
Background
Planning and approving new housing is mainly a local responsibility. The California Constitution allows cities and counties to “make and enforce within its limits, all local, police, sanitary and other ordinances and regulations not in conflict with general laws.” It is from this fundamental power (commonly called the police power) that cities and counties derive their authority to regulate behavior to preserve the health, safety, and welfare of the public—including land use authority.
Planning and Zoning Law. State law provides additional powers and duties for cities and counties regarding land use. The Planning and Zoning Law requires every county and city to adopt a general plan that sets out planned uses for all of the area that it covers. A general plan must include specified mandatory “elements,” including a housing element that establishes the locations and densities of housing, among other requirements. Cities’ and counties’ major land use decisions—including most zoning ordinances and other aspects of development permitting—must be consistent with their general plans.
Zoning and approval processes. Local governments use their police power to enact zoning ordinances that establish the types of land uses that are allowed or authorized in an area. Zoning often identifies a primary use for parcels in the area, as well as other uses that are allowed if they meet conditions imposed by the local government. For example, an agricultural area may be zoned to allow agricultural uses “by right”—without local discretion—but also allow development of a single family home as an ancillary use, so that the farmer has a house to inhabit. Uses that are by-right must be permitted ministerially—with no discretion by the local government—and by-right approvals are not subject to review under the California Environmental Quality Act (CEQA). Zoning ordinances also contain provisions to physically shape development and impose other requirements, such as setting maximum heights and densities for housing units, minimum numbers of required parking spaces, setbacks, and lot coverage ratios. These ordinances can also include conditions on development to address aesthetics, community impacts, or other particular site-specific considerations.
Adaptive Reuse. According to an April 24, 2020, brief published by McKinsey and Company, the onset of COVID-19 aggravated the challenges that the retail sector faces, including:
- A shift to online purchasing over brick-and-mortar sales;
- Customers seeking safe and healthy purchasing options;
- Increased emphasis on value for money when purchasing goods;
- Movement towards more flexible and versatile labor; and
- Reduced consumer loyalty in favor of less expensive brands.
As the shift away from traditional office and retail uses accelerates, interest has grown in “adaptive reuse”—the process of converting an existing non-residential building to housing. Adaptive reuse is not a new concept: in 1999, the City of Los Angeles adopted an Adaptive Reuse Ordinance (ARO) to revitalize underused buildings within the city's downtown area by facilitating the conversion of existing commercial buildings into residential or mixed-use properties. By easing some zoning requirements, the ARO enabled developers to transform vacant or underutilized office buildings, theaters, and other commercial structures into residential units.
However, adaptive reuse is not without its challenges. According to a 2021 report by the Terner Center for Housing Innovation, Adaptive Reuse Challenges and Opportunities in California: “the potential of adaptive reuse is contingent upon numerous different factors, including architectural considerations related to the existing structure, political and legislative constraints, and issues surrounding economic feasibility.” The report notes light and ventilation requirements differ between commercial and residential uses, which are often fundamental features of the existing structure that may not be easily modified, and bringing older buildings up to current residential codes can be rife with undiscovered challenges, which increase costs. It also states, “streamlining approvals and minimizing parking requirements can significantly increase the feasibility of adaptive reuse projects by reducing risk and costs of conversion. Reducing parking can lead to an increase in the number of units that the project can support. … Not requiring additional parking also eliminates a barrier to adaptive reuse projects, especially within dense urban areas with no physical space to locate any new parking stalls.”
Some housing supply advocates want to make it easier to convert existing buildings to residential uses.
Proposed Law
Assembly Bill 3068 enacts the Office to Housing Conversion Act, which creates a streamlined, ministerial approval process for adaptive reuse projects and provides certain financial incentives for the adaptive reuse of existing buildings.
Office to Housing Conversion Act. AB 3068 deems an adaptive reuse project that meets the requirements of the bill a use by right in all zones and establishes a streamlined, ministerial review process.
Site requirements. An adaptive reuse project must be located on an infill site, as specified, and be for an existing building that is:
- Less than 50 years old;
- Listed on a local, state, or federal register of historic resources and the adaptive reuse project proponent complies with specified historic resource protection requirements described below; or
- The project is proposed for an existing building that is more than 50 years old and the local government has evaluated the site as specified and determined that the building or site is either: (1) a historic resource and the adaptive reuse project proponent complies with the historic resource protection requirements; or (2) not a historic resource.
Historic resource protection requirements. Before submitting an application for an adaptive reuse project for a structure that is more than 50 years old and not listed on a local, state, or federal register of historic resources, the development proponent must submit to the local government a notice of its intent to submit an application, as specified.
When the local government receives a notice of intent, it must evaluate the project site for the existence of historical resources within 90 days. This review must be conducted by a qualified individual, as specified in federal regulations, and is not subject to CEQA.
If the adaptive reuse project is proposed for an existing building that is listed on a local, state, or federal register of historic resources, or if the local government has determined that the project site is a significant historic resource following the process above, the project proponent must declare that the project will only move forward if it complies with specified federal standards for rehabilitation of a historic structure, or if the project is awarded specified state or federal historic rehabilitation tax credits.
A project proponent may still submit an application for an adaptive reuse project if it does not make the declaration above, but the local government can deny or conditionally approve the project if it makes a finding, supported by a preponderance of evidence in the record, that the project will cause a significant adverse impact to historic resources. The bill limits the historic mitigation requirements a local government can impose to those in the federal standards for rehabilitation.
Affordability requirements. An adaptive reuse project must meet specified affordability requirements, generally that the project provide:
- At least 8 percent of the units for very low income households and 5 percent of the units for extremely low income households, or 15 percent for lower income households, for rental projects; or
- 30 percent for moderate income households, or 15 percent for lower income households, for ownership projects.
The bill includes provisions for counting these affordable units towards local inclusionary housing requirements, as specified, and requires the affordable units to be comparable to the market rate units in the project.
Labor standards. An adaptive reuse project proponent must require in contracts with construction contractors, and must certify to the local government, that a development that is not in its entirety a public work will meet the following wage provisions:
- All construction workers employed in the execution of the development must be paid prevailing wage;
- The development proponent must ensure the prevailing wage requirement is included in all contracts for the performance of the work for those portions of the development that are not a public work; and
- All contractors and subcontractors for those portions of the development that are not a public work must maintain and verify payroll records, and make those records available for inspection and copying.
The obligation of the contractors and subcontractors to pay prevailing wages pursuant to this bill may be enforced by the Labor Commissioner, an underpaid worker, and a joint labor-management committee through a civil action.
However, the requirement that the employer pay prevailing wages does not apply to those portions of project that are not a public work if they are otherwise provided in a bona fide collective bargaining agreement covering the worker, and the enforcement and record-keeping requirements don’t apply if there is a project labor agreement in place that meets specified requirements.
For a project of 40 or more housing units that does not include a building of more than four stories in height, the project proponent must use contractors that:
- Participate in specified apprenticeship programs; and
- Make specified health care expenditures for each employee sufficient to cover two 40-year-old adults and two dependents 0 to 14 years of age. Qualifying expenditures are credited toward compliance with prevailing wage payment requirements.
A construction contractor is deemed in compliance with the above requirements if it is signatory to a valid collective bargaining agreement or project labor agreement that requires using registered apprentices and expenditures on health care for employees and dependents.
For a project of 40 or more units that includes a building of more than four stories in height, the development proponent must use a skilled and trained workforce at every tier of the project, as specified, in addition to the above requirements.
The bill subjects the development proponent to monthly compliance reporting with the labor standards above, and other reporting and disclosure requirements regarding payroll records, the apprenticeship program participation, and health care requirements, and imposes specified penalties for failing to provide reports or comply with labor standards.
A local government may also take administrative action against or sue a construction contractor for failure to comply with the skilled and trained workforce requirements, and a local government may issue a stop notice to halt further work on the project or revoke a building permit if the general contractor on the project doesn’t meet the requirements of the bill.
Additional structures. An adaptive reuse project can include the development of new residential or mixed-use structures on undeveloped areas and parking areas on the same parcel or parcels adjacent to the proposed adaptive reuse project site if all of the following requirements are met:
- The adjacent portion of the project to the proposed repurposed existing building complies with one of the following: all local objective standards, as specified, or the requirements of two existing laws that allow residential construction in office or retail zones;
- The adjacent portion of the project is also an infill site and not on specified sensitive environmental sites identified in existing law;
- The project complies with specified demolition and anti-displacement provisions in existing law;
- The applicant and local agency follow procedures for identifying impacts to tribal cultural resources in existing law; and
- Any existing open space on the proposed project site is not a contributor to a historic resource.
Any new project on an adjacent site is also eligible for benefits under density bonus law, and the project can also include rooftop structures on the existing building that exceed any applicable height limitation imposed by the local government, as long as the rooftop structure does not exceed one story and is used for shared amenities.
Other standards. An adaptive reuse project must also comply with the following:
- The proponent must complete specified environmental assessments and avoid or mitigate specified environmental harms; and
- If the adaptive reuse project includes mixed uses, at least one-half of the square footage of the adaptive reuse project must be dedicated to residential uses.
A city or county can adopt an ordinance that is consistent with the requirements of the bill, but a local agency cannot impose any requirements on the basis that the project is eligible for approval under the bill. A project must comply with all objective planning standards found in an adopted ordinance. Adopting an ordinance is not a project for the purposes of CEQA. A city or county that hasn’t adopted an ordinance must still ministerially approve applications submitted under the bill. AB 3068 also provides that it doesn’t preempt the adoption or implementation of a local ordinance that provides alternative procedures and substantive requirements for adaptive reuse projects, provided that the local ordinance does not prohibit an applicant from electing to pursue an adaptive reuse project, as specified.
An adaptive reuse project cannot be required to have parking if it doesn’t have existing onsite parking, and a project on an adjacent site is exempt from minimum parking requirements if the adjacent portion of the project is located within one-half mile of public transit and in other specified circumstances. Otherwise, a city or county may require up to one space per unit. The bill also provides that it doesn’t reduce or eliminate the enforcement of any requirement imposed on a project that includes existing onsite parking to provide electric vehicle parking spaces or parking spaces that are accessible to persons with disabilities that would have otherwise applied to the development.
An adaptive reuse project can’t violate the terms of any conservation easement, and it can’t use Density Bonus Law to increase the height of the adaptively reused building beyond the addition of “rooftop structures” as authorized above.
Approval process. AB 3068 requires a city or county to approve an adaptive reuse project if the local planning director or equivalent position determines that the project is consistent with the objective planning standards in the bill. If the planning director determines that the project conflicts with any of the objective planning standards, they must provide the development proponent written documentation of which standards the development conflicts with, and an explanation for the reason or reasons the development conflicts with that standard or standards. This must be done within:
- 60 days if the project contains 150 or fewer housing units; or
- 90 days if the project contains more than 150 housing units; and
- 30 days of submittal of any adaptive reuse project that was resubmitted to the local government following a determination of a conflict with one or more objective planning standards
These time limits apply to review by all departments of the local agency that review development applications.
If the planning director fails to provide the required documentation, the adaptive reuse project is deemed to satisfy the objective planning standards. The bill also provides that an adaptive reuse project is consistent with the applicable objective planning standards if there is substantial evidence that would allow a reasonable person to conclude the project is consistent with the objective planning standards, as specified.
AB 3068 limits any local design review to objective standards, including, as applicable, those for new exterior additions to historic buildings, as specified, and prohibits a city or county from inhibiting, chilling, or precluding the ministerial approval in any way. If the project is consistent with the applicable objective standards, the city or county must approve the project within:
- 60 days if the project contains 150 or fewer housing units; or
- 90 days if the project contains more than 150 housing units.
If the project involves subdividing the property into smaller parcels, AB 3068 exempts an application for a subdivision from CEQA if the adaptive reuse project is consistent with the requirements the bill and all objective subdivision standards in the local subdivision ordinance. Review of the application for a subdivision map must meet the 60- or 90-day timeline above.
AB 3068 prohibits a city or county from requiring additional studies that aren’t directly related to evaluating compliance with the objective standards, and can’t require compliance with specified postentitlement permits at the planning stage, but can impose such requirements later in the process.
An approval granted under the bill is valid for three years. The approval may be extended by one year at the option of the city or county and must be extended during any litigation and as long as duly permitted construction activity is occurring at the site. An approval never expires for specified affordable housing projects.
AB 3068 spells out procedures for requesting modifications to an adaptive reuse project or a project on an adjacent site, and requires local agencies to grant subsequent permits for projects without unreasonable delay. Alterations to comply with building codes or other code standards must also be permitted.
AB 3068 says a project can use other applicable ministerial streamlining laws, and can benefit from the protections of the Housing Accountability Act.
Impact fees for adaptive reuse projects. AB 3068 exempts an adaptive reuse project from all impact fees that are not reasonably related to the impacts resulting from the change of use of the site from nonresidential to residential or mixed use, and any fees charged must be roughly proportional to the difference in impacts caused by the change of use. A project on an adjacent site cannot benefit from these provisions and must pay all local fees as required by the local government under existing law.
Adaptive reuse investment incentive program (ARIIP). AB 3068 allows a city or county to offer financial incentives for up to 30 years to subsidize affordable units that are part of an adaptive reuse project under the bill. Specifically, a city or county can adopt an ordinance or resolution creating the incentive program. A project proponent applies to the city or county by filing a request, which must be approved by a majority vote of the city or county’s governing body for payments to commence. If approved, a proponent receives a payment equal to the amount of property taxes paid and received by that city or county that is in excess of the adaptive reuse project property’s valuation at the time of the proponent’s initial request for funding.
Other agencies’ shares of tax revenues from that property are not affected, but a city or special district may also pay the county or city that establishes this program an amount equal to the amount of property tax revenue that the local government receives, less the assessed valuation at the time the application is submitted.
AB 3068 defines its terms and includes findings and declarations to support its purposes.
Comments
1. Purpose of the bill. According to the author, “COVID-19 permanently altered the way humans approach work. In the post pandemic era, many businesses realized that developments in technology allow them to move away from the 9 to 5, commuter model that kept downtown office buildings full of people during the work week. As the capital of technological innovation, California has been particularly impacted by this transition as more and more tech companies shift to offering remote work as a benefit to their employees.
“A major downside to this transition is California’s emptying downtown business districts. Office vacancies across the state have hit record highs with Los Angeles and San Francisco both reaching over 30% vacancy rates. Many economists are theorizing that unless local and state governments act quickly, downtowns may be facing a doom-loop scenario with empty, devalued buildings leading to a severe decrease in local government tax bases, leading to decreased services and blight.
“Converting vacant office buildings into new residential units will not only stop doom-loop scenarios, it will also revitalize and enliven business districts that often became ghost towns after 5pm. California also continues to suffer from a statewide housing shortage – to address this local governments must plan for the production of more than 2.5 million homes in the next several years.
“Office to housing conversion is a win-win scenario that builds housing, preserves historic buildings, and creates new thriving communities in transit rich areas. California needs to get out of its own way and make office to housing conversions as easy as humanly possible. This bill does exactly that.”
2. Home rule. A fundamental principle of zoning since the United States Supreme Court upheld an early zoning ordinance in 1926 (Village of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926)) has been that allowing some uses in one area but prohibiting others can be integral to protecting the public welfare. Local governments have historically separated uses to avoid siting incompatible activities, such as industrial and residential activity, near one another. This approach also mitigates potential public health issues, such as air pollution impacts from heavy industrial uses on nearby residents. AB 3068 makes housing a use by right on properties that were originally sited in non-residential zones, which contravenes this principle. It also undermines the planning decisions made by local officials, who established which uses are allowed and at what intensity. Should the state tell local governments to approve this type of residential use in places where local governments have not allowed it?
3. What’s new, pussycat? AB 3068 was previously heard by the Senate Local Government Committee on June 11, 2024, and was amended on the Senate Floor on August 23, 2024. Those amendments include:
- Changes to the labor standards that are required for adaptive reuse projects. Specifically, previous versions of AB 3068 did not require the use of a skilled and trained workforce, but the 8/23 version of the bill inserts such a requirement for projects that include both more than 40 units and a building of more than four stories in height;
- Prohibiting use of the bill for hotel projects and on sites larger than 20 acres;
- Prohibiting local governments from adding requirements that would require modification of the exterior shape of the building (building envelope) beyond what is required by the building code;
- Clarifying that it doesn’t preempt certain local adaptive reuse ordinances;
- Modifications to the historic building standards that apply;
- Prohibiting the use of the bill in the Coastal Zone but allowing the use of the bill on land with a conservation easement;
- Shortening the period that local governments have to approve a project that is consistent with the requirements of the bill;
- Revising the definition of infill sites to be “urban areas,” as defined by the Census; and
- Numerous other smaller changes, including technical and clarifying changes.
4. Conservation easements. A conservation easement is a binding restriction on a piece of property that imposes limitations on how that property can be used or modified. Conservation easements are used to protect land predominantly in its natural, scenic, historical, agricultural, forested, or open‐space condition. AB 3068 excludes from the bill the construction of additional structures on sites adjacent to an adaptive reused building if the site is on a list of sensitive environmental sites in existing law, with one key difference. Unlike other laws that have incorporated that list of sensitive sites, AB 3068 streamlines projects could be built on land that is under a conservation easement, as long as they don’t violate the terms of the easement. The purpose of this change is to allow the construction of new structures on historic sites that are protected by conservation easement, as long as they adhere to the terms of the easement. However, conservation easements are used broadly for environmental protection—not just for protecting historical properties. Allowing construction on part of a property, even if it complies with the terms of any conservation easements, can affect a site’s utility for habitat. Additionally, because easements are binding restrictions on the use of the land, violating the terms of an easement is already a violation of the law, so the provision in AB 3068 that prohibits violation of easement terms is redundant. It is unclear whether this requirement provides sufficient protection for lands under conservation easement, and AB 3068’s changes may set a precedent for building on sensitive environmental sites.
5. Mandate. The California Constitution requires the state to reimburse local governments for the costs of new or expanded state mandated local programs. Because AB 3068 changes the duties of local officials and creates a new crime, Legislative Counsel says that the bill imposes a new state mandate. AB 3068 disclaims the state's responsibility for providing reimbursement by citing local governments’ authority to charge for the costs of implementing the bill’s provisions and because the costs are due to expanding a crime.
6. Charter city. The California Constitution allows cities that adopt charters to control their own “municipal affairs.” In all other matters, charter cities must follow the general, statewide laws. Because the Constitution doesn't define “municipal affairs,” the courts determine whether a topic is a municipal affair or whether it's an issue of statewide concern. AB 3068 says that it applies to charter cities and includes findings and declarations to support this statement.
7. Related legislation. The Legislature is considering an additional measure that seeks to further adaptive reuse. AB 2488 (Ting) allows the City and County of San Francisco to establish a downtown revitalization and economic recovery financing district to finance commercial-to-residential conversion projects with incremental tax revenues generated by conversion projects within the district. AB 2488 is currently pending on the Senate Floor.
8. Committee referral pursuant to Senate Rule 29.10(b). The Senate Local Government Committee approved AB 3068 on June 11th by a 4-3 vote. On August 23rd, the bill was amended to add a skilled and trained requirement and make other changes, as described above. Because these amendments rewrite the bill, they triggered Senate Rule 29.10(b) and a referral back to this Committee. The Rule provides that the Committee has three options:
- Hold the bill;
- Return the bill to the Floor for consideration; or
- Re-refer the bill to fiscal committee pursuant to Senate Rule 10.5.
Assembly Actions
Assembly Housing and Community Development Committee: 9-0
Assembly Local Government Committee: 6-1
Assembly Appropriations Committee: 11-3
Assembly Floor: 58-5
Support and Opposition
(8/26/24)
Support:
Yimby Action (Sponsor)
Abundant Housing LA
Advance Sf
Aids Healthcare Foundation
Bay Area Council
California Apartment Association
California Community Builders
California Preservation Foundation
California Yimby
Circulate San Diego
Civicwell
East Bay Yimby
Fieldstead and Company, INC.
Greenlining Institute; the
Grow the Richmond
Housing Action Coalition
Housing Trust Silicon Valley
International Interior Design Association Northern California Chapter
International Interior Design Association Southern California Chapter
Leadingage California
Mountain View Yimby
Napa-Solano for Everyone
Northern Neighbors
Peninsula for Everyone
Progress Noe Valley
San Francisco Yimby
San Luis Obispo Yimby
Santa Cruz Yimby
Santa Rosa Yimby
South Bay Yimby
Southside Forward
Spur
Streets for All
Streets for People
Urban Environmentalists
Ventura County Yimby
Opposition: California Contract Cities Association
City of Santa Clarita
City of Thousand Oaks
League of California Cities
Western Electrical Contractors Association
-- END --
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB 3068 |
THIRD READING
Bill No: AB 3068
Author: Haney (D), et al.
Amended: 8/23/24 in Senate
Vote: 21
SENATE LOCAL GOVERNMENT COMMITTEE: 4-3, 6/11/24
AYES: Durazo, Skinner, Wahab, Wiener
NOES: Seyarto, Dahle, Glazer
SENATE HOUSING COMMITTEE: 8-2, 7/2/24
AYES: Skinner, Blakespear, Caballero, Cortese, Menjivar, Padilla, Umberg, Wahab
NOES: Ochoa Bogh, Seyarto
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SENATE LOCAL GOVERNMENT COMMITTEE: 4-1, 8/27/24 (Pursuant to Senate Rule 29.10)
AYES: Durazo, Skinner, Wahab, Wiener
NOES: Seyarto
NO VOTE RECORDED: Dahle, Glazer
ASSEMBLY FLOOR: 58-5, 5/22/24 - See last page for vote
SUBJECT: Adaptive reuse: streamlining: incentives
SOURCE: YIMBY Action
DIGEST:
This bill enacts the Office to Housing Conversion Act, which creates a streamlined, ministerial approval process for adaptive reuse projects and provides certain financial incentives for the adaptive reuse of existing buildings.
Senate Floor Amendments of 8/23/24 revise the labor language to require the use of a skilled and trained workforce for projects that include both more than 40 units and a building of more than four stories in height, shorten the time that local governments have to approve consistent projects, and make other changes.
ANALYSIS:
Existing law:
- Allows, pursuant to the California Constitution, cities and counties to “make and enforce within its limits, all local, police, sanitary and other ordinances and regulations not in conflict with general laws.” It is from this fundamental power (commonly called the police power) that cities and counties derive their authority to regulate behavior to preserve the health, safety, and welfare of the public—including land use authority.
- Requires every county and city to adopt a general plan that sets out planned uses for all of the area that it covers.
- Establishes, pursuant to AB 1490 (Lee, Chapter 764, Statutes of 2023), a ministerial, streamlined approval process for the adaptive reuse of buildings into 100 percent affordable housing.
- Establishes, pursuant to SB 423 (Wiener, Chapter 778, Statutes of 2023), a streamlined, ministerial approval process for certain infill multifamily affordable housing projects that are compliant with local zoning and objective standards and that are proposed in local jurisdictions that have not met their regional housing needs allocation.
- Establishes, pursuant to AB 2011 (Wicks, Chapter 647, Statutes of 2022), a streamlined, ministerial approval process for certain infill multifamily affordable housing projects that are located on land that is zoned for retail, office, or parking.
- Allows, pursuant to SB 6 (Caballero Chapter 659, Statutes of 2022), the Middle Class Housing Act of 2022, residential uses on commercially zoned property without requiring a rezoning.
- Authorizes the California Department of Housing and Community Development (HCD) to enforce state housing laws.
This bill:
- Deems an adaptive reuse project that meets the requirements of the bill a use by right in all zones and establishes a streamlined, ministerial review process for these projects, as specified below.
Site requirements
- An adaptive reuse project must be located on an infill site, as specified, and be for an existing building that is one of the following:
- Less than 50 years old.
- Listed on a local, state, or federal register of historic resources and the adaptive reuse project proponent complies with specified historic resource protection requirements described below.
- The project is proposed for an existing building and the local government has evaluated the site as specified and determined that the building or site is either: (1) a historic resource and the adaptive reuse project proponent complies with the historic resource protection requirements; or (2) not a historic resource.
- The proponent must complete a specified environmental assessment and avoid or mitigate specified environmental harms.
- If the adaptive reuse project includes mixed uses, at least one-half of the square footage of the adaptive reuse project must be dedicated to residential uses.
- Prohibits a project from violating the terms of any conservation easement applicable to the site.
- Prescribes the operation of density bonus law relative to these projects, including to specify that a project is not eligible for a density bonus waiver or incentive that has the effect of increasing the height of the adaptively reused building above what is allowed by the bill.
- Prohibits hotels from being included in the projects streamlined by the bill.
- Limits the acreage of the project site to 20 acres.
Historic resource protection requirements
- Prior to submitting an application for an adaptive reuse project for a structure that is more than 50 years old and not listed on a local, state, or federal register of historic resources, the development proponent must submit to the local government a notice of its intent to submit an application, as specified.
- If the adaptive reuse project is proposed for an existing building that is listed on a local, state, or federal register of historic resources, or if the local government has determined that the project site is a significant historic resource, the adaptive reuse project proponent must declare that the project will only move forward if it complies with specified federal standards for rehabilitation of a historic structure.
Affordability requirements
- Requires an adaptive reuse project to meet specified affordability requirements, generally that the project provide:
- At least 8 percent of the units for very low income households and 5 percent of the units for extremely low income households, or 15 percent for lower income households, for rental projects.
- 30 percent for moderate income households, or 15 percent for lower income households, for ownership projects.
Labor standards
- Requires that all the following standards will be met in project construction:
- A development that is not in its entirety a public work must meet the following wage provisions:
- All construction workers employed in the execution of the development must be paid prevailing wage.
- The development proponent must ensure the prevailing wage requirement is included in all contracts for the performance of the work for those portions of the development that are not a public work.
- All contractors and subcontractors for those portions of the development that are not a public work must maintain and verify payroll records, and make those records available for inspection and copying.
- A development that is not in its entirety a public work must meet the following wage provisions:
- For projects of 40 or more housing units that do not include a building of more than four stories, requires the project proponent to use contractors that:
- Participated in an apprenticeship program.
- Meet minimum health care expenditure requirements.
- For projects of 40 or more units that include a building of more than four stories, requires the use of a skilled and trained workforce at every tier of the project.
- Exempts from specified aspects of the requirements noted above the portions of the project that are subject to a bona fide collective bargaining agreement or a project labor agreement that meets specified requirements.
- Subjects the development proponent to monthly compliance reporting with the labor standards above, and other reporting and disclosure requirements regarding payroll records, the apprenticeship program participation, and health care requirements.
- Imposes specified penalties for failing to provide reports or comply with labor standards.
- Allows a local government may also take administrative action against or sue a construction contractor for failure to comply with the skilled and trained workforce requirements, and to issue a stop notice to halt further work on the project or revoke a building permit if the general contractor on the project doesn’t meet the requirements of the bill.
Additional structures
- Allows an adaptive reuse project to include the development of new residential or mixed-use structures on undeveloped areas and parking areas on the parcel for the site or the parcels adjacent to the proposed adaptive reuse project site if project is on an infill site, meets specified objective standards and environmental criteria, is not a historic resource, and the applicant and local agency follow procedures for identifying impacts to tribal cultural resources.
Approval process
- Requires a city or county to approve an adaptive reuse project if the local planning director or equivalent position determines that the project is consistent with the objective planning standards in the bill, and specifies timelines for the planning director to conduct design review and make the determination based on project size.
- Specifies that if the planning director fails to make a determination as specified, the project shall be deemed to comply with the objective standards. Additionally the bill provides that a project shall be considered consistent with the applicable objective planning standards if there is substantial evidence that would allow a reasonable person to conclude the project is consistent with the standards, as specified.
- Specifies that if a project involves subdividing the property into smaller parcels, the application for a subdivision is not subject to CEQA if the adaptive reuse project is consistent with specified requirements and all objective subdivision standards in the local subdivision ordinance, and establishes review timelines.
- Prohibits a city or county from requiring:
- Additional studies that aren’t directly related to evaluating compliance with the objective standards.
- Compliance with specified postentitlement permits at the planning stage, but provides that those requirements can be imposes later in the approval process.
- Changes to the building’s envelope unless required to comply with the building code.
- Provides that it doesn’t preempt the adoption and implementation of a local ordinance that provides alternative procedures and substantive requirements for adaptive reuse projects, provided that the local ordinance does not prohibit an applicant from electing to use the bill.
Impact fee.
- Exempts an adaptive reuse project from all impact fees that are not reasonably related to the impacts resulting from the change of use of the site from nonresidential to residential or mixed use, and any fees charged must be roughly proportional to the difference in impacts caused by the change of use.
Adaptive reuse investment incentive program (ARIIP)
- Allows a city or county to offer financial incentives for up to 30 years to subsidize affordable units that are part of an adaptive reuse project under the bill.
- A project proponent applies to the city or county by filing a request, which must be approved by a majority vote of the city or county’s governing body for payments to commence. If approved, a proponent receives a payment equal to the amount of property taxes paid and received by that city or county that is in excess of the adaptive reuse project property’s valuation at the time of the proponent’s initial request for funding.
Other provisions and enforcement
- Allows a city or county to adopt an ordinance that is consistent with the requirements of the bill, as specified. A local agency cannot impose any requirements on the basis that the project is eligible for approval under the bill. An ordinance adopted by a local government to implement the bill is not a project for the purposes of the California Environmental Quality Act.
- Requires a local government that doesn’t adopt an ordinance to ministerially approve applications pursuant to the bill.
- Specifies that a project can use other applicable ministerial streamlining laws, and can benefit from the protections of the Housing Accountability Act.
- Defines its terms.
- Includes findings and declarations to support its purpose.
Background
Adaptive Reuse. According to an April 24, 2020, brief published by McKinsey and Company, the onset of COVID-19 has aggravated the existing challenges that the retail sector faces, including:
- A shift to online purchasing over brick-and-mortar sales;
- Customers seeking safe and healthy purchasing options;
- Increased emphasis on value for money when purchasing goods;
- Movement towards more flexible and versatile labor; and
- Reduced consumer loyalty in favor of less expensive brands.
As the shift away from traditional office and retail uses accelerates, interest has grown in “adaptive reuse”—the process of converting an existing non-residential building to housing. Adaptive reuse is not a new concept: in 1999, the City of Los Angeles adopted an Adaptive Reuse Ordinance (ARO) to revitalize underused buildings within the city's downtown area by facilitating the conversion of existing commercial buildings into residential or mixed-use properties. By easing some zoning requirements, the ARO enabled developers to transform vacant or underutilized office buildings, theaters, and other commercial structures into residential units.
However, adaptive reuse is not without its challenges. According to a 2021 report by the Terner Center for Housing Innovation, Adaptive Reuse Challenges and Opportunities in California: “the potential of adaptive reuse is contingent upon numerous different factors, including architectural considerations related to the existing structure, political and legislative constraints, and issues surrounding economic feasibility.” The report notes light and ventilation requirements differ between commercial and residential uses, which are often fundamental features of the existing structure that may not be easily modified, and bringing older buildings up to current residential codes can be rife with undiscovered challenges, which increase costs. It also states, “streamlining approvals and minimizing parking requirements can significantly increase the feasibility of adaptive reuse projects by reducing risk and costs of conversion. Reducing parking can lead to an increase in the number of units that the project can support. … Not requiring additional parking also eliminates a barrier to adaptive reuse projects, especially within dense urban areas with no physical space to locate any new parking stalls.”
Some housing supply advocates want to make it easier to convert existing buildings to residential uses.
Comments
- Purpose of the bill. According to the author, “COVID-19 permanently altered the way humans approach work. In the post pandemic era, many businesses realized that developments in technology allow them to move away from the 9 to 5, commuter model that kept downtown office buildings full of people during the work week. As the capital of technological innovation, California has been particularly impacted by this transition as more and more tech companies shift to offering remote work as a benefit to their employees.
“A major downside to this transition is California’s emptying downtown business districts. Office vacancies across the state have hit record highs with Los Angeles and San Francisco both reaching over 30% vacancy rates. Many economists are theorizing that unless local and state governments act quickly, downtowns may be facing a doom-loop scenario with empty, devalued buildings leading to a severe decrease in local government tax bases, leading to decreased services and blight.
“Converting vacant office buildings into new residential units will not only stop doom-loop scenarios, it will also revitalize and enliven business districts that often became ghost towns after 5pm. California also continues to suffer from a statewide housing shortage – to address this local governments must plan for the production of more than 2.5 million homes in the next several years.
“Office to housing conversion is a win-win scenario that builds housing, preserves historic buildings, and creates new thriving communities in transit rich areas. California needs to get out of its own way and make office to housing conversions as easy as humanly possible. This bill does exactly that.”
- Home rule. A fundamental principle of zoning since the United States Supreme Court upheld an early zoning ordinance in 1926 (Village of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926)) has been that allowing some uses in one area but prohibiting others can be integral to protecting the public welfare. Local governments have historically separated uses to avoid siting incompatible activities, such as industrial and residential activity, near one another. It also mitigates potential public health issues, such as air pollution impacts from heavy industrial uses on nearby residents. AB 3068 makes housing a use by right on properties that were originally sited in non-residential zones, which contravenes this principle. It also undermines the planning decisions made by local officials, who established which uses are allowed and at what intensity. Specifically, some jurisdictions, including the cities of Sacramento and Los Angeles, have enacted adaptive reuse ordinances of their own. Should the state tell local governments to approve this type of residential use in places where local governments have yet to say it’s appropriate?
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes
SUPPORT: (Verified 8/27/24)
YIMBY Action (source)
Abundant Housing LA
Advance Sf
Aids Healthcare Foundation
Bay Area Council
California Apartment Association
California Community Builders
California Preservation Foundation
California Yimby
Circulate San Diego
Civicwell
East Bay Yimby
Fieldstead and Company, INC.
Greenlining Institute; the
Grow the Richmond
Housing Action Coalition
Housing Trust Silicon Valley
International Interior Design Association Northern California Chapter
International Interior Design Association Southern California Chapter
Leadingage California
Mountain View Yimby
Napa-Solano for Everyone
Northern Neighbors
Peninsula for Everyone
Progress Noe Valley
San Francisco Yimby
San Luis Obispo Yimby
Santa Cruz Yimby
Santa Rosa Yimby
South Bay Yimby
Southside Forward
Spur
State Building and Construction Trades Council
Streets for All
Streets for People
Urban Environmentalists
Ventura County Yimby
OPPOSITION: (Verified 8/27/24)
California Contract Cities Association
California Housing Consortium
California Housing Partnership
City of Santa Clarita
City of Thousand Oaks
League of California Cities
Western Electrical Contractors Association
ASSEMBLY FLOOR: 58-5, 5/22/24
AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Juan Carrillo, Wendy Carrillo, Connolly, Mike Fong, Gabriel, Garcia, Gipson, Grayson, Haney, Hart, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Stephanie Nguyen, Ortega, Pacheco, Papan, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Rodriguez, Blanca Rubio, Santiago, Soria, Ting, Valencia, Villapudua, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas
NOES: Davies, Dixon, Vince Fong, Sanchez, Waldron
NO VOTE RECORDED: Calderon, Cervantes, Chen, Megan Dahle, Essayli, Flora, Friedman, Gallagher, Holden, Lackey, Mathis, Muratsuchi, Jim Patterson, Joe Patterson, Luz Rivas, Schiavo, Ta
Prepared by: Anton Favorini-Csorba / L. GOV. / (916) 651-4119
8/27/24 19:51:21
**** END ****
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB 3068 |
THIRD READING
Bill No: AB 3068
Author: Haney (D), et al.
Amended: 7/3/24 in Senate
Vote: 21
SENATE LOCAL GOVERNMENT COMMITTEE: 4-3, 6/11/24
AYES: Durazo, Skinner, Wahab, Wiener
NOES: Seyarto, Dahle, Glazer
SENATE HOUSING COMMITTEE: 8-2, 7/2/24
AYES: Skinner, Blakespear, Caballero, Cortese, Menjivar, Padilla, Umberg, Wahab
NOES: Ochoa Bogh, Seyarto
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 58-5, 5/22/24 - See last page for vote
SUBJECT: Adaptive reuse: streamlining: incentives
SOURCE: YIMBY Action
DIGEST:
This bill enacts the Office to Housing Conversion Act, which creates a streamlined, ministerial approval process for adaptive reuse projects and provides certain financial incentives for the adaptive reuse of existing buildings.
ANALYSIS:
Existing law:
- Allows, pursuant to the California Constitution, cities and counties to “make and enforce within its limits, all local, police, sanitary and other ordinances and regulations not in conflict with general laws.” It is from this fundamental power (commonly called the police power) that cities and counties derive their authority to regulate behavior to preserve the health, safety, and welfare of the public—including land use authority.
- Requires every county and city to adopt a general plan that sets out planned uses for all of the area that it covers.
- Establishes, pursuant to AB 1490 (Lee, Chapter 764, Statutes of 2023), a ministerial, streamlined approval process for the adaptive reuse of buildings into 100 percent affordable housing.
- Establishes, pursuant to SB 423 (Wiener, Chapter 778, Statutes of 2023), a streamlined, ministerial approval process for certain infill multifamily affordable housing projects that are compliant with local zoning and objective standards and that are proposed in local jurisdictions that have not met their regional housing needs allocation.
- Establishes, pursuant to AB 2011 (Wicks, Chapter 647, Statutes of 2022), a streamlined, ministerial approval process for certain infill multifamily affordable housing projects that are located on land that is zoned for retail, office, or parking.
- Allows, pursuant to SB 6 (Caballero Chapter 659, Statutes of 2022), the Middle Class Housing Act of 2022, residential uses on commercially zoned property without requiring a rezoning.
- Authorizes the California Department of Housing and Community Development (HCD) to enforce state housing laws.
This bill:
- Deems an adaptive reuse project that meets the requirements of the bill a use by right in all zones and establishes a streamlined, ministerial review process for these projects, as specified below.
Site requirements
- An adaptive reuse project must be located on an infill site, as specified, and be for an existing building that is one of the following:
- Less than 50 years old.
- Listed on a local, state, or federal register of historic resources and the adaptive reuse project proponent complies with specified historic resource protection requirements described below.
- The project is proposed for an existing building and the local government has evaluated the site as specified and determined that the building or site is either: (1) a historic resource and the adaptive reuse project proponent complies with the historic resource protection requirements; or (2) not a historic resource.
- The proponent must complete a specified environmental assessment and avoid or mitigate specified environmental harms.
- If the adaptive reuse project includes mixed uses, at least one-half of the square footage of the adaptive reuse project must be dedicated to residential uses.
- Prohibits a project from violating the terms of any conservation easement applicable to the site.
- Prescribes the operation of density bonus law relative to these projects, including to specify that a project is not elidiblt for a density bonus waiver or incentive that has the effect of increasing the height of the adaptively reused building above what is allowed by the bill.
Historic resource protection requirements
- Prior to submitting an application for an adaptive reuse project for a structure that is more than 50 years old and not listed on a local, state, or federal register of historic resources, the development proponent must submit to the local government a notice of its intent to submit an application, as specified.
- If the adaptive reuse project is proposed for an existing building that is listed on a local, state, or federal register of historic resources, or if the local government has determined that the project site is a significant historic resource, the adaptive reuse project proponent must declare that the project will only move forward if it complies with specified federal standards for rehabilitation of a historic structure.
Affordability requirements
- Requires an adaptive reuse project to meet specified affordability requirements, generally that the project provide:
- At least 8 percent of the units for very low income households and 5 percent of the units for extremely low income households, or 15 percent for lower income households, for rental projects.
- 30 percent for moderate income households, or 15 percent for lower income households, for ownership projects.
Labor standard
- Requires that all the following standards will be met in project construction:
- A development that is not in its entirety a public work must meet the following wage provisions:
- All construction workers employed in the execution of the development must be paid prevailing wage.
- The development proponent must ensure the prevailing wage requirement is included in all contracts for the performance of the work for those portions of the development that are not a public work.
- All contractors and subcontractors for those portions of the development that are not a public work must maintain and verify payroll records, and make those records available for inspection and copying.
- A development that is not in its entirety a public work must meet the following wage provisions:
- For projects of 50 or more housing units, requires the project proponent to use contractors that:
- Participated in an apprenticeship program.
- Meet minimum health care expenditure requirements.
- Subjects development proponents to monthly compliance reporting regarding the labor standards noted above.
- Exempts from specified aspects of the requirements noted above the portions of the project that are subject to a bona fide collective bargaining agreement or a project labor agreement that meets specified requirements.
Additional structures
- Allows an adaptive reuse project to include the development of new residential or mixed-use structures on undeveloped areas and parking areas on the parcel for the site or the parcels adjacent to the proposed adaptive reuse project site if project is on an infill site, meets specified objective standards and environmental criteria, is not a historic resource, and the applicant and local agency follow procedures for identifying impacts to tribal cultural resources.
Approval process
- Requires a city or county to approve an adaptive reuse project if the local planning director or equivalent position determines that the project is consistent with the objective planning standards in the bill, and specifies timelines for the planning director to conduct design review and make the determination based on project size.
- Specifies that if the planning director fails to make a determination as specified, the project shall be deemed to comply with the objective standards. Additionally the bill provides that a project shall be considered consistent with the applicable objective planning standards if there is substantial evidence that would allow a reasonable person to conclude the project is consistent with the standards, as specified.
- Specifies that if a project involves subdividing the property into smaller parcels, the application for a subdivision is not subject to CEQA if the adaptive reuse project is consistent with specified requirements and all objective subdivision standards in the local subdivision ordinance, and establishes review timelines.
- Prohibits a city or county from requiring additional studies that aren’t directly related to evaluating compliance with the objective standards.
- Prohibits a city or county from requiring compliance with specified postentitlement permits at the planning stage, but provides that those requirements can be imposes later in the approval process.
Impact fee.
- Exempts an adaptive reuse project from all impact fees that are not reasonably related to the impacts resulting from the change of use of the site from nonresidential to residential or mixed use, and any fees charged must be roughly proportional to the difference in impacts caused by the change of use.
Adaptive reuse investment incentive program (ARIIP)
- Allows a city or county to offer financial incentives for up to 30 years to subsidize affordable units that are part of an adaptive reuse project under the bill.
- A project proponent applies to the city or county by filing a request, which must be approved by a majority vote of the city or county’s governing body for payments to commence. If approved, a proponent receives a payment equal to the amount of property taxes paid and received by that city or county that is in excess of the adaptive reuse project property’s valuation at the time of the proponent’s initial request for funding.
Other provisions and enforcement
- Allows a city or county to adopt an ordinance that is consistent with the requirements of the bill, as specified. A local agency cannot impose any requirements on the basis that the project is eligible for approval under the bill. An ordinance adopted by a local government to implement the bill is not a project for the purposes of the California Environmental Quality Act.
- Requires a local government that doesn’t adopt an ordinance to ministerially approve applications pursuant to the bill.
- Specifies that a project can use other applicable ministerial streamlining laws, and can benefit from the protections of the Housing Accountability Act.
- Adds the “Office to Housing Conversion Act” to the list in existing law that grants the Department of Housing and Community Development enforcement authority over housing statutes.
- Defines its terms.
- Includes findings and declarations to support its purpose.
Background
Adaptive Reuse. According to an April 24, 2020, brief published by McKinsey and Company, the onset of COVID-19 has aggravated the existing challenges that the retail sector faces, including:
- A shift to online purchasing over brick-and-mortar sales;
- Customers seeking safe and healthy purchasing options;
- Increased emphasis on value for money when purchasing goods;
- Movement towards more flexible and versatile labor; and
- Reduced consumer loyalty in favor of less expensive brands.
As the shift away from traditional office and retail uses accelerates, interest has grown in “adaptive reuse”—the process of converting an existing non-residential building to housing. Adaptive reuse is not a new concept: in 1999, the City of Los Angeles adopted an Adaptive Reuse Ordinance (ARO) to revitalize underused buildings within the city's downtown area by facilitating the conversion of existing commercial buildings into residential or mixed-use properties. By easing some zoning requirements, the ARO enabled developers to transform vacant or underutilized office buildings, theaters, and other commercial structures into residential units.
However, adaptive reuse is not without its challenges. According to a 2021 report by the Terner Center for Housing Innovation, Adaptive Reuse Challenges and Opportunities in California: “the potential of adaptive reuse is contingent upon numerous different factors, including architectural considerations related to the existing structure, political and legislative constraints, and issues surrounding economic feasibility.” The report notes light and ventilation requirements differ between commercial and residential uses, which are often fundamental features of the existing structure that may not be easily modified, and bringing older buildings up to current residential codes can be rife with undiscovered challenges, which increase costs. It also states, “streamlining approvals and minimizing parking requirements can significantly increase the feasibility of adaptive reuse projects by reducing risk and costs of conversion. Reducing parking can lead to an increase in the number of units that the project can support. … Not requiring additional parking also eliminates a barrier to adaptive reuse projects, especially within dense urban areas with no physical space to locate any new parking stalls.”
Some housing supply advocates want to make it easier to convert existing buildings to residential uses.
Comments
- Purpose of the bill. According to the author, “COVID-19 permanently altered the way humans approach work. In the post pandemic era, many businesses realized that developments in technology allow them to move away from the 9 to 5, commuter model that kept downtown office buildings full of people during the work week. As the capital of technological innovation, California has been particularly impacted by this transition as more and more tech companies shift to offering remote work as a benefit to their employees.
“A major downside to this transition is California’s emptying downtown business districts. Office vacancies across the state have hit record highs with Los Angeles and San Francisco both reaching over 30% vacancy rates. Many economists are theorizing that unless local and state governments act quickly, downtowns may be facing a doom-loop scenario with empty, devalued buildings leading to a severe decrease in local government tax bases, leading to decreased services and blight.
“Converting vacant office buildings into new residential units will not only stop doom-loop scenarios, it will also revitalize and enliven business districts that often became ghost towns after 5pm. California also continues to suffer from a statewide housing shortage – to address this local governments must plan for the production of more than 2.5 million homes in the next several years.
“Office to housing conversion is a win-win scenario that builds housing, preserves historic buildings, and creates new thriving communities in transit rich areas. California needs to get out of its own way and make office to housing conversions as easy as humanly possible. This bill does exactly that.”
- Home rule. A fundamental principle of zoning since the United States Supreme Court upheld an early zoning ordinance in 1926 (Village of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926)) has been that allowing some uses in one area but prohibiting others can be integral to protecting the public welfare. Local governments have historically separated uses to avoid siting incompatible activities, such as industrial and residential activity, near one another. It also mitigates potential public health issues, such as air pollution impacts from heavy industrial uses on nearby residents. AB 3068 makes housing a use by right on properties that were originally sited in non-residential zones, which contravenes this principle. It also undermines the planning decisions made by local officials, who established which uses are allowed and at what intensity. Specifically, some jurisdictions, including the cities of Sacramento and Los Angeles, have enacted adaptive reuse ordinances of their own. Should the state tell local governments to approve this type of residential use in places where local governments have yet to say it’s appropriate?
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes
SUPPORT: (Verified 8/13/24)
YIMBY Action (source)
Abundant Housing LA
Advance Sf
Aids Healthcare Foundation
Bay Area Council
California Apartment Association
California Community Builders
California Preservation Foundation
California Yimby
Circulate San Diego
Civicwell
East Bay Yimby
Fieldstead and Company, INC.
Greenlining Institute; the
Grow the Richmond
Housing Action Coalition
Housing Trust Silicon Valley
International Interior Design Association Northern California Chapter
International Interior Design Association Southern California Chapter
Leadingage California
Mountain View Yimby
Napa-Solano for Everyone
Northern Neighbors
Peninsula for Everyone
Progress Noe Valley
San Francisco Yimby
San Luis Obispo Yimby
Santa Cruz Yimby
Santa Rosa Yimby
South Bay Yimby
Southside Forward
Spur
Streets for All
Streets for People
Urban Environmentalists
Ventura County Yimby
OPPOSITION: (Verified 8/13/24)
California Contract Cities Association
City of Santa Clarita
City of Thousand Oaks
League of California Cities
Western Electrical Contractors Association
ASSEMBLY FLOOR: 58-5, 5/22/24
AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Juan Carrillo, Wendy Carrillo, Connolly, Mike Fong, Gabriel, Garcia, Gipson, Grayson, Haney, Hart, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Stephanie Nguyen, Ortega, Pacheco, Papan, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Rodriguez, Blanca Rubio, Santiago, Soria, Ting, Valencia, Villapudua, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas
NOES: Davies, Dixon, Vince Fong, Sanchez, Waldron
NO VOTE RECORDED: Calderon, Cervantes, Chen, Megan Dahle, Essayli, Flora, Friedman, Gallagher, Holden, Lackey, Mathis, Muratsuchi, Jim Patterson, Joe Patterson, Luz Rivas, Schiavo, Ta
Prepared by: Anton Favorini-Csorba / L. GOV. / (916) 651-4119
8/14/24 14:03:15
**** END ****
SENATE COMMITTEE ON HOUSING
Senator Nancy Skinner, Chair
2023 - 2024 Regular
Bill No: AB 3068 Hearing Date: 7/2/2024
Author: | Haney | ||
Version: | 6/12/2024 | ||
Urgency: | No | Fiscal: | Yes |
Consultant: | Hank Brady | ||
SUBJECT: Adaptive reuse: streamlining: incentives.
DIGEST: This bill enacts the Office to Housing Conversion Act, which creates a streamlined, ministerial approval process for adaptive reuse projects and provides certain financial incentives for the adaptive reuse of existing buildings.
ANALYSIS:
Existing law:
- Establishes the California Environmental Quality Act (CEQA), which requires public agencies with the principal responsibility for carrying out or approving a proposed project to prepare a negative declaration, mitigated negative declaration, or an environmental impact report (EIR) for this action, unless the project is exempt from CEQA.
- Establishes, pursuant to AB 1490 (Lee, Chapter 764, Statutes of 2023), a ministerial, streamlined approval process for the adaptive reuse of buildings into 100 percent affordable housing.
- Establishes, pursuant to SB 423 (Wiener, Chapter 778, Statutes of 2023), a streamlined, ministerial approval process for certain infill multifamily affordable housing projects that are compliant with local zoning and objective standards and that are proposed in local jurisdictions that have not met their regional housing needs allocation.
- Establishes, pursuant to AB 2011 (Wicks, Chapter 647, Statutes of 2022), a streamlined, ministerial approval process for certain infill multifamily affordable housing projects that are located on land that is zoned for retail, office, or parking.
- Allows, pursuant to SB 6 (Caballero Chapter 659, Statutes of 2022), the Middle Class Housing Act of 2022, residential uses on commercially zoned property without requiring a rezoning.
- Authorizes the California Department of Housing and Community Development (HCD) to enforce state housing laws.
This bill:
- Deems an adaptive reuse project that meets the requirements of the bill a use by right in all zones and establishes a streamlined, ministerial review process for these projects, as specified below:
Site Requirements.
- An adaptive reuse project must be located on an infill site, as specified, and be for an existing building that is one of the following:
- Less than 50 years old.
- Listed on a local, state, or federal register of historic resources and the adaptive reuse project proponent complies with specified historic resource protection requirements described below.
- The project is proposed for an existing building and the local government has evaluated the site as specified and determined that the building or site is either: (1) a historic resource and the adaptive reuse project proponent complies with the historic resource protection requirements; or (2) not a historic resource.
- The proponent must complete specified environmental assessments and avoid or mitigate specified environmental harms.
- If the adaptive reuse project includes mixed uses, at least one-half of the square footage of the adaptive reuse project must be dedicated to residential uses.
Historic resource protection requirements.
- Prior to submitting an application for an adaptive reuse project for a structure that is more than 50 years old and not listed on a local, state, or federal register of historic resources, the development proponent must submit to the local government a notice of its intent to submit an application, as specified.
- If the adaptive reuse project is proposed for an existing building that is listed on a local, state, or federal register of historic resources, or if the local government has determined that the project site is a significant historic resource, the adaptive reuse project proponent must declare that the project will only move forward if it complies with specified federal standards for rehabilitation of a historic structure.
Affordability requirements.
- An adaptive reuse project must meet specified affordability requirements, generally that the project provide:
- At least 8 percent of the units for very low income households and 5 percent of the units for extremely low income households, or 15 percent for lower income households, for rental projects.
- 30 percent for moderate income households, or 15 percent for lower income households, for ownership projects.
Labor standards.
- An adaptive reuse project proponent must require in contracts with construction contractors, and must certify to the local government, that all the following standards will be met in project construction:
- A development that is not in its entirety a public work must meet the following wage provisions:
- All construction workers employed in the execution of the development must be paid prevailing wage.
- The development proponent must ensure the prevailing wage requirement is included in all contracts for the performance of the work for those portions of the development that are not a public work.
- All contractors and subcontractors for those portions of the development that are not a public work must maintain and verify payroll records, and make those records available for inspection and copying.
- For projects of 50 or more housing units, the project proponent must use contractors that:
- Participated in an apprenticeship program.
- Meet minimum health care expenditure requirements.
- A development that is not in its entirety a public work must meet the following wage provisions:
- Development proponents are subject to monthly compliance reporting regarding the labor standards noted above.
- Aspects of the requirements noted above do not apply to portions of the project that are subject to a bona fide collective bargaining agreement or project labor agreement that meets specified requirements.
Additional structures.
- An adaptive reuse project can include the development of new residential or mixed-use structures on undeveloped areas and parking areas on the parcels adjacent to the proposed adaptive reuse project site if project is on an infill site, meets specified objective standards and environmental criteria, is not a historic resource, and the applicant and local agency follow procedures for identifying impacts to tribal cultural resources.
Approval process
- Requires a city or county to approve an adaptive reuse project if the local planning director or equivalent position determines that the project is consistent with the objective planning standards in the bill, and specifies timelines for the planning director to conduct design review and make the determination based on project size.
- Specifies that if the planning director fails to make a determination as specified, the project shall be deemed to comply with the objective standards. Additionally the bill provides that a project shall be considered consistent with the applicable objective planning standards if there is substantial evidence that would allow a reasonable person to conclude the project is consistent with the standards, as specified.
- Specifies that if a project involves subdividing the property into smaller parcels, the application for a subdivision is not subject to CEQA if the adaptive reuse project is consistent with specified requirements and all objective subdivision standards in the local subdivision ordinance, and establishes review timelines.
- Prohibits a city or county from requiring additional studies that aren’t directly related to evaluating compliance with the objective standards.
- Prohibits a city or county from requiring compliance with specified postentitlement permits at the planning stage, but provides that those requirements can be imposes later in the approval process.
Impact fees.
- Exempts an adaptive reuse project from all impact fees that are not reasonably related to the impacts resulting from the change of use of the site from nonresidential to residential or mixed use, and any fees charged must be roughly proportional to the difference in impacts caused by the change of use.
Adaptive reuse investment incentive program (ARIIP).
- Allows a city or county to offer financial incentives for up to 15 years to subsidize affordable units that are part of an adaptive reuse project under the bill.
- A project proponent applies to the city or county by filing a request, which must be approved by a majority vote of the city or county’s governing body for payments to commence. If approved, a proponent receives a payment equal to the amount of property taxes paid and received by that city or county that is in excess of the adaptive reuse project property’s valuation at the time of the proponent’s initial request for funding.
Other provisions and enforcement.
- A city or county can adopt an ordinance that is consistent with the requirements of the bill, as specified. A local agency cannot impose any requirements on the basis that the project is eligible for approval under the bill.
- Specifies that a project can use other applicable ministerial streamlining laws, and can benefit from the protections of the Housing Accountability Act.
- Adds the “Office to Housing Conversion Act” to the list in existing law that grants the Department of Housing and Community Development enforcement authority over housing statutes.
COMMENTS:
- Author’s Statement. “Office vacancies across the state have hit record highs with Los Angeles and San Francisco both reaching over 30% vacancy rates. Many economists are theorizing that unless local and state governments act quickly, downtowns may be facing a doom-loop scenario with empty, devalued buildings leading to a severe decrease in local government tax bases, leading to decreased services and blight…Office to housing conversion is a win-win scenario that builds housing, preserves historic buildings, and creates new thriving communities in transit rich areas. California needs to get out of its own way and make office to housing conversions as easy as humanly possible. This bill does exactly that.”
- Zoning Ordinances and CEQA. CEQA establishes a process for evaluating the environmental effects of a project. Under CEQA, a local agency carrying out a discretionary project must first determine if the project may have a significant effect on the environment. Projects can include jurisdiction-wide efforts such as the update of a general plan, approval of jurisdiction-wide contracts (e.g., waste hauling contracts or water service), and zoning ordinance amendments. A project can also include individual development actions such as the approval of housing developments, stadiums, gas storage facilities, and other types of developments. In the case of any discretionary project, if a local agency finds that the potential for significant environmental impacts exists, CEQA requires the agency to prepare and certify the completion of an EIR. While CEQA includes certain statutory and categorical exemptions, the provisions of CEQA explicitly apply to “discretionary projects proposed to be carried out or approved by public agencies, including, but not limited to, the enactment and amendment of zoning ordinances, the issuance of zoning variances, the issuance of conditional use permits, and the approval of tentative subdivision maps unless the project is exempt from this division.” (Emphasis added).
- Housing Development Projects and CEQA. In light of the state’s ongoing housing crisis, the Legislature created several statutory exemptions from CEQA for specific types of housing development projects in order to increase the production of housing. The Legislature also created several statutory schemes that require local governments to approve specified housing development projects ministerially. Ministerial approvals remove a project from all discretionary decisions of a public agency, and thus are not subject to CEQA which only applies to discretionary approvals.
Bypassing CEQA can provide a tremendous benefit to property owners, developers, local governments and other parties involved in the approval of a project as it allows for the project to be completed in an expedited fashion. The Legislature balances the risk of allowing projects to proceed without a full environmental review by ensuring that these projects comply with scores of objective standards and criteria and that they are not located on environmentally sensitive sites. These standards and criteria are an expression of the state’s values and ensure that exempt projects do not result in harm to public health and safety and the environment.
- Authorizing Residential Development in Commercial Zones. In addition to streamlining CEQA review at the project level for specific types of housing developments, the Legislature recently enacted several bills to facilitate the production of more housing by increasing the sites available for residential development. Notably, AB 2011 (Wicks, Chapter 647, Statutes of 2022) and (SB 6, Caballero, Chapter 659, Statutes of 2022) both made certain types of housing developments an allowable use on land zoned for commercial uses; these bills effectively rezoned eligible parcels statutorily and increased the stock of land that could be developed into housing in California. These bills obviated the need for a local government to conduct a CEQA review in order to rezone certain commercial parcels to allow housing development on these parcels.
- Adaptive Reuse. The state under-produced housing prior to the onset of COVID-19, and the economic stagnation resulting from the outbreak may further erode housing production. Meanwhile, according to an April 24, 2020, brief published by McKinsey and Company, the onset of COVID-19 has aggravated the existing challenges that the retail sector faces. Several large retailers such as Nieman Marcus, J.C. Penney, J. Crew, and Pier 1 are filing for bankruptcy, and store closings have already been announced or are expected in the future. The investment firm UBS estimates that by 2025, 100,000 stores in the United States will close as online sales grow from 15% to 25% of total retail sales. This bill seeks to capitalize on a potential opportunity for redeveloping vacant or abandoned commercial properties into housing.
- Amendments. The author proposes a number of amendments to this bill to but was unable to finalize them prior to the committee deadline. Therefore, the committee will consider them as committee amendments. The author will accept the following amendments:
- Increase the amount of time a local government may pay incentive funds to an adaptive reuse project from 15 years to 30 years.
- Allow adaptive reuse projects to occur on sites that were industrial uses provided that the building is no longer economically viable for an industrial use, as specified.
- Specify that the bill’s provisions apply to a “city and county.”
- Specify that “adjacent portion of the project” includes buildings on the same parcel as the proposed adaptive reuse project.
- Provide that a local ordinance adopted to implement this bill is not a project for the purposes of CEQA.
- Specify that if a local agency must approve projects ministerially whether or not it has adopted an implementation ordinance.
- Specify that the environmental assessment required in the bill is a condition of final approval rather than an assessment the developer must conduct prior to gaining eligibility for streamlining.
- Provide that an adaptive reuse project that does not currently include on-site automobile parking is not required to add new on-site parking.
- Provide that an adaptive reuse project that currently includes on-site parking is not required to meet local minimum parking requirements except for requirements for parking spaces for persons with disabilities and parking spaces equipped with electric vehicle charging infrastructure.
- Specify that adaptive reuse projects shall not violate conservation easements.
- Provide that adaptive reuse projects are eligible for a density bonus, as specified.
- Adds specificity to obligations for a project applicant and local government related to noticing and preserving historical resources such as building facades and interior character defining spaces in a manner consistent with federal standards.
- Define “urban uses” to have the same meaning as it does in AB 2011 (Wicks, Chapter 647, Statutes of 2022).
- Make the environmental sensitive site criteria consistent with the criteria the Committee approved in AB 2243 (Wicks) with respect to applicability in the Coastal Zone.
- Adds findings and declarations.
- Makes other technical changes.
- Opposition. Several local agency associations and other groups are opposed to the bill. The League of California Cities is concerned that deeming adaptive reuse projects by-right undermines cities’ ability to make decisions locally. They also raise concerns that the bills limitations on impact fees will make it difficult for cities to fund essential services and infrastructure improvements.
- Incoming! This bill passed out of the Local Government Committee on June 11, 2024 on a 4-3 vote.
Related Legislation:
AB 930 (Friedman, 2023) — allows local agencies to create Reinvestment in Infrastructure for a Sustainable and Equitable California (RISE) districts and provides these new districts various financing powers to finance sustainable infrastructure projects. The measure is being heard at this same hearing.
AB 2488 (Ting, 2024) — allows the City and County of San Francisco to establish a downtown revitalization and economic recovery financing district to finance office-to-residential conversion projects with incremental tax revenues generated by conversion projects within the district. This measure is currently pending in this committee.
SB 1227 (Wiener, 2024) — would have created an alternate welfare exemption from property tax for housing available to those of moderate income in downtown San Francisco, and enacts a CEQA exemption and allows CEQA streamlining for specific projects in the area. The measure was held on the Senate Appropriations suspense file.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes
POSITIONS: (Communicated to the committee before noon on Wednesday,
June 26, 2024.)
SUPPORT:
California Preservation Foundation (Co-Sponsor)
YIMBY Action (Co-Sponsor)
Abundant Housing LA
Advance SF
AIDS Healthcare Foundation
Bay Area Council
California Apartment Association
California Community Builders
California YIMBY
Circulate San Diego
Civicwell
East Bay YIMBY
Fieldstead and Company
Grow the Richmond
Housing Trust Silicon Valley
International Interior Design Association Northern California Chapter
International Interior Design Association Southern California Chapter
LeadingAge California
Mountain View YIMBY
Napa-Solano for Everyone
Northern Neighbors
Peninsula for Everyone
Progress Noe Valley
San Francisco YIMBY
San Luis Obispo YIMBY
Santa Cruz YIMBY
Santa Rosa YIMBY
South Bay YIMBY
Southside Forward
SPUR
Streets for All
Streets for People
The Greenlining Institute
Urban Environmentalists
Ventura County YIMBY
OPPOSITION:
California Contract Cities Association
City of Santa Clarita
League of California Cities
Western Electrical Contractors Association
-- END --
SENATE COMMITTEE ON LOCAL GOVERNMENT
Senator María Elena Durazo, Chair
2023 - 2024 Regular
Bill No: | AB 3068 | Hearing Date: | 6/11/24 |
Author: | Haney | Fiscal: | Yes |
Version: | 4/18/24 | Consultant: | Favorini-Csorba |
Adaptive reuse: streamlining: incentives
Enacts the Office to Housing Conversion Act, which creates a streamlined, ministerial approval process for adaptive reuse projects and provides certain financial incentives for the adaptive reuse of existing buildings.
Background
Planning and approving new housing is mainly a local responsibility. The California Constitution allows cities and counties to “make and enforce within its limits, all local, police, sanitary and other ordinances and regulations not in conflict with general laws.” It is from this fundamental power (commonly called the police power) that cities and counties derive their authority to regulate behavior to preserve the health, safety, and welfare of the public—including land use authority.
Planning and Zoning Law. State law provides additional powers and duties for cities and counties regarding land use. The Planning and Zoning Law requires every county and city to adopt a general plan that sets out planned uses for all of the area that it covers. A general plan must include specified mandatory “elements,” including a housing element that establishes the locations and densities of housing, among other requirements. Cities’ and counties’ major land use decisions—including most zoning ordinances and other aspects of development permitting—must be consistent with their general plans.
Zoning and approval processes. Local governments use their police power to enact zoning ordinances that establish the types of land uses that are allowed or authorized in an area. Zoning often identifies a primary use for parcels in the area, as well as other uses that are allowed if they meet conditions imposed by the local government. For example, an agricultural area may be zoned to allow agricultural uses “by right”—without local discretion—but also allow development of a single family home as an ancillary use, so that the farmer has a house to inhabit. Zoning ordinances also contain provisions to physically shape development and impose other requirements, such as setting maximum heights and densities for housing units, minimum numbers of required parking spaces, setbacks, and lot coverage ratios. These ordinances can also include conditions on development to address aesthetics, community impacts, or other particular site-specific considerations.
Adaptive Reuse. According to an April 24, 2020, brief published by McKinsey and Company, the onset of COVID-19 has aggravated the existing challenges that the retail sector faces, including:
- A shift to online purchasing over brick-and-mortar sales;
- Customers seeking safe and healthy purchasing options;
- Increased emphasis on value for money when purchasing goods;
- Movement towards more flexible and versatile labor; and
- Reduced consumer loyalty in favor of less expensive brands.
As the shift away from traditional office and retail uses accelerates, interest has grown in “adaptive reuse”—the process of converting an existing non-residential building to housing. Adaptive reuse is not a new concept: in 1999, the City of Los Angeles adopted an Adaptive Reuse Ordinance (ARO) to revitalize underused buildings within the city's downtown area by facilitating the conversion of existing commercial buildings into residential or mixed-use properties. By easing some zoning requirements, the ARO enabled developers to transform vacant or underutilized office buildings, theaters, and other commercial structures into residential units.
However, adaptive reuse is not without its challenges. According to a 2021 report by the Terner Center for Housing Innovation, Adaptive Reuse Challenges and Opportunities in California: “the potential of adaptive reuse is contingent upon numerous different factors, including architectural considerations related to the existing structure, political and legislative constraints, and issues surrounding economic feasibility.” The report notes light and ventilation requirements differ between commercial and residential uses, which are often fundamental features of the existing structure that may not be easily modified, and bringing older buildings up to current residential codes can be rife with undiscovered challenges, which increase costs. It also states, “streamlining approvals and minimizing parking requirements can significantly increase the feasibility of adaptive reuse projects by reducing risk and costs of conversion. Reducing parking can lead to an increase in the number of units that the project can support. … Not requiring additional parking also eliminates a barrier to adaptive reuse projects, especially within dense urban areas with no physical space to locate any new parking stalls.”
Some housing supply advocates want to make it easier to convert existing buildings to residential uses.
Proposed Law
Assembly Bill 3068 enacts the Office to Housing Conversion Act, which creates a streamlined, ministerial approval process for adaptive reuse projects and provides certain financial incentives for the adaptive reuse of existing buildings.
Office to Housing Conversion Act. AB 3068 deems an adaptive reuse project that meets the requirements of the bill a use by right in all zones and establishes a streamlined, ministerial review process.
Site requirements. An adaptive reuse project must be located on an infill site, as specified, and be for an existing building that is:
- Less than 50 years old;
- Listed on a local, state, or federal register of historic resources and the adaptive reuse project proponent complies with specified historic resource protection requirements described below; or
- The project is proposed for an existing building that is more than 50 years old and the local government has evaluated the site as specified and determined that the building or site is either: (1) a historic resource and the adaptive reuse project proponent complies with the historic resource protection requirements; or (2) not a historic resource.
Historic resource protection requirements. Before submitting an application for an adaptive reuse project for a structure that is more than 50 years old and not listed on a local, state, or federal register of historic resources, the development proponent must submit to the local government a notice of its intent to submit an application, as specified.
When the local government receives a notice of intent, it must evaluate the project site for historical resources within 90 days. This review is not subject to CEQA.
If the adaptive reuse project is proposed for an existing building that is listed on a local, state, or federal register of historic resources, or if the local government has determined that the project site is a significant historic resource following the process above, the adaptive reuse project proponent must declare that the project will only move forward if it complies with specified federal standards for rehabilitation of a historic structure, or if the project is awarded specified state or federal historic rehabilitation tax credits.
A project proponent may still submit an application for an adaptive reuse project if it does not make the declaration above, but the local government can deny or conditionally approve the project if it makes a finding that the project will cause a significant adverse impact to historic resources. The bill limits the historic mitigation requirements a local government can impose to those in the federal standards for rehabilitation.
Affordability requirements. An adaptive reuse project must meet specified affordability requirements, generally that the project provide:
- At least 8 percent of the units for very low income households and 5 percent of the units for extremely low income households, or 15 percent for lower income households, for rental projects; or
- 30 percent for moderate income households, or 15 percent for lower income households, for ownership projects.
The bill includes provisions for counting these affordable units towards local inclusionary housing requirements, as specified, and requires the affordable units to be comparable to the market rate units in the project.
Labor standards. An adaptive reuse project proponent must require in contracts with construction contractors, and must certify to the local government, that all the following standards will be met in project construction.
A development that is not in its entirety a public work must meet the following wage provisions:
- All construction workers employed in the execution of the development must be paid prevailing wage;
- The development proponent must ensure the prevailing wage requirement is included in all contracts for the performance of the work for those portions of the development that are not a public work; and
- All contractors and subcontractors for those portions of the development that are not a public work must maintain and verify payroll records, and make those records available for inspection and copying.
The obligation of the contractors and subcontractors to pay prevailing wages pursuant to this bill may be enforced by the Labor Commissioner, an underpaid worker, and a joint labor-management committee through a civil action.
However, the requirement that the employer pay prevailing wages does not apply to those portions of project that are not a public work if they are otherwise provided in a bona fide collective bargaining agreement covering the worker, and the enforcement and record-keeping requirements don’t apply if there is a project labor agreement in place that meets specified requirements.
For a project of 50 or more housing units, the project proponent must use contractors that:
- Participate in specified apprenticeship programs; and
- Make specified health care expenditures for each employee sufficient to cover two 40-year-old adults and two dependents 0 to 14 years of age. Qualifying expenditures are credited toward compliance with prevailing wage payment requirements.
A construction contractor is deemed in compliance with the requirements of the above bullets if it is signatory to a valid collective bargaining agreement that requires using registered apprentices and expenditures on health care for employees and dependents.
The bill subjects the development proponent to monthly compliance reporting with the labor standards above, and other reporting and disclosure requirements regarding payroll records, the apprenticeship program participation, and health care requirements, and imposes specified penalties for failing to provide reports or comply with labor standards.
Additional structures. An adaptive reuse project can include the development of new residential or mixed-use structures on undeveloped areas and parking areas on the parcels adjacent to the proposed adaptive reuse project site if all of the following requirements are met:
- The adjacent portion of the project on the site adjacent to the proposed repurposed existing building complies with one of the following: all local objective standards, as specified, or the requirements of two existing laws that allow residential construction in office or retail zones;
- The adjacent portion of the project is also an infill site and not on specified sensitive environmental sites identified in existing law;
- The project complies with specified demolition and anti-displacement provisions in existing law;
- The applicant and local agency follow procedures for identifying impacts to tribal cultural resources in existing law; and
- Any existing open space on the proposed project site is not a contributor to a historic resource.
A project on an adjacent site is exempt from minimum parking requirements if the adjacent portion of the project is located within one-half mile of public transit and in other specified circumstances. Otherwise, a city or county may require up to one space per unit.
Any new project on an adjacent site is also eligible for benefits under density bonus law, and the project can also include rooftop structures on the existing building that exceed any applicable height limitation imposed by the local government, as long as the rooftop structure does not exceed one story and is used for shared amenities.
Other standards. An adaptive reuse project must also comply with the following:
- The proponent must complete specified environmental assessments and avoid or mitigate specified environmental harms; and
- If the adaptive reuse project includes mixed uses, at least one-half of the square footage of the adaptive reuse project must be dedicated to residential uses.
A city or county can adopt an ordinance that is consistent with the requirements of the bill, but a local agency cannot impose any requirements on the basis that the project is eligible for approval under the bill.
Approval process. AB 3068 requires a city or county to approve an adaptive reuse project if the local planning director or equivalent position determines that the project is consistent with the objective planning standards in the bill. If the planning director determines that the project conflicts with any of the objective planning standards, they must provide the development proponent written documentation of which standards the development conflicts with, and an explanation for the reason or reasons the development conflicts with that standard or standards. This must be done within: (1) 60 days if the project contains 150 or fewer housing units; or (2) 90 days if the project contains more than 150 housing units. These time limits apply to review by all departments of the local agency that review development applications.
If the planning director fails to provide the required documentation, the adaptive reuse project is deemed to satisfy the objective planning standards. The bill also provides that an adaptive reuse project is consistent with the applicable objective planning standards if there is substantial evidence that would allow a reasonable person to conclude the project is consistent with the objective planning standards, as specified.
AB 3068 limits any local design review to objective standards and prohibits a city or county from inhibiting, chilling, or precluding the ministerial approval in any way. If the project is consistent with the applicable objective standards, the city or county must approve the project within:
- 90 days if the project contains 150 or fewer housing units; or
- 180 days if the project contains more than 150 housing units.
If the project involves subdividing the property into smaller parcels, AB 3068 exempts an application for a subdivision from CEQA if the adaptive reuse project is consistent with the requirements the bill and all objective subdivision standards in the local subdivision ordinance, and review of the application must meet the 90 or 180 day timeline above.
AB 3068 prohibits a city or county from requiring additional studies that aren’t directly related to evaluating compliance with the objective standards, and can’t require compliance with specified postentitlement permits at the planning stage, but can impose such requirements later in the process.
An approval granted under the bill is valid for three years. The approval may be extended by one year at the option of the city or county and must be extended during any litigation and as long as duly permitted construction activity is occurring at the site. An approval never expires for specified affordable housing projects.
AB 3068 spells out procedures for requesting modifications to an adaptive reuse project or a project on an adjacent site, and requires local agencies to grant subsequent permits for projects without unreasonable delay. Alterations to comply with building codes or other code standards must also be permitted.
AB 3068 says a project can use other applicable ministerial streamlining laws, and can benefit from the protections of the Housing Accountability Act, and it adds the “Office to Housing Conversion Act” to the list in existing law that grants the Department of Housing and Community Development enforcement authority over housing statutes.
Impact fees for adaptive reuse projects. AB 3068 exempts an adaptive reuse project from all impact fees that are not directly related to the impacts resulting from the change of use of the site from nonresidential to residential or mixed use, and any fees charged must be proportional to the difference in impacts caused by the change of use. A local government cannot collect these fees until the date the certificate of occupancy is issued, but the local government must require the fees to be paid subject to an enforceable contract, as specified.
A project on an adjacent site cannot benefit from these provisions and must pay all local fees as required by the local government under existing law.
Adaptive reuse investment incentive program (ARIIP). AB 3068 allows a city or county to offer financial incentives for up to 15 years to subsidize affordable units that are part of an adaptive reuse project under the bill. Specifically, a city or county can adopt an ordinance or resolution creating the incentive program. A project proponent applies to the city or county by filing a request, which must be approved by a majority vote of the city or county’s governing body for payments to commence. If approved, a proponent receives a payment equal to the amount of property taxes paid and received by that city or county that is in excess of the adaptive reuse project property’s valuation at the time of the proponent’s initial request for funding.
Other agencies’ shares of tax revenues from that property are not affected, but a city or special district may also pay the county or city that establishes this program an amount equal to the amount of property tax revenue that the local government receives, less the assessed valuation at the time the application is submitted.
AB 3068 defines its terms and includes findings and declarations to support its purposes.
Comments
1. Purpose of the bill. According to the author, “COVID-19 permanently altered the way humans approach work. In the post pandemic era, many businesses realized that developments in technology allow them to move away from the 9 to 5, commuter model that kept downtown office buildings full of people during the work week. As the capital of technological innovation, California has been particularly impacted by this transition as more and more tech companies shift to offering remote work as a benefit to their employees.
“A major downside to this transition is California’s emptying downtown business districts. Office vacancies across the state have hit record highs with Los Angeles and San Francisco both reaching over 30% vacancy rates. Many economists are theorizing that unless local and state governments act quickly, downtowns may be facing a doom-loop scenario with empty, devalued buildings leading to a severe decrease in local government tax bases, leading to decreased services and blight.
“Converting vacant office buildings into new residential units will not only stop doom-loop scenarios, it will also revitalize and enliven business districts that often became ghost towns after 5pm. California also continues to suffer from a statewide housing shortage – to address this local governments must plan for the production of more than 2.5 million homes in the next several years.
“Office to housing conversion is a win-win scenario that builds housing, preserves historic buildings, and creates new thriving communities in transit rich areas. California needs to get out of its own way and make office to housing conversions as easy as humanly possible. This bill does exactly that.”
2. Home rule. A fundamental principle of zoning since the United States Supreme Court upheld an early zoning ordinance in 1926 (Village of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926)) has been that allowing some uses in one area but prohibiting others can be integral to protecting the public welfare. Local governments have historically separated uses to avoid siting incompatible activities, such as industrial and residential activity, near one another. It also mitigates potential public health issues, such as air pollution impacts from heavy industrial uses on nearby residents. AB 3068 makes housing a use by right on properties that were originally sited in non-residential zones, which contravenes this principle. It also undermines the planning decisions made by local officials, who established which uses are allowed and at what intensity. Specifically, some jurisdictions, including the cities of Sacramento and Los Angeles, have enacted adaptive reuse ordinances of their own. Should the state tell local governments to approve this type of residential use in places where local governments have yet to say it’s appropriate?
3. Don’t let money change you. A comprehensive body of law, including case law and the Mitigation Fee Act, regulates the ability of local governments to charge impact fees to offset the effects of new development. These fees must be reasonably related and roughly proportional to the impact of the development. AB 3068 includes two provisions regarding the impact fees that can be imposed on adaptive reuse projects authorized by the bill that present concerns:
- First, AB 3068 prohibits local agencies from charging impact fees that are not directly related and proportional to the conversion from non-residential to residential use, with the notion that since these are existing buildings, their impacts are less than other projects. However, in doing so, AB 3068 enacts a new and untested standard for determining whether a local government has properly imposed fees. To ensure local governments have clear direction on the fees they can and can’t charge, the Committee may wish to consider amending AB 3068 to prohibit the local agency from charging fees that aren’t reasonably related and roughly proportional to the change in use.
- Second, AB 3068 delays collection of impact fees until a certificate of occupancy is issued. The Legislature is considering nine bills related to impact fees this year, including two that would specifically address when in the development process a local agency can collect impact fees: (1) SB 937 (Wiener), which the Committee approved on a 6-0 vote at its April 3rd hearing, delays fee collection for certain priority housing projects to certificate of occupancy; and (2) AB 2729 (Patterson), which is also scheduled for the Committee’s June 11th hearing, delays collection of impact fees to certificate of occupancy for all projects. Given that the Legislature is comprehensively considering the timing of impact fee collection in other measures, the Committee may wish to consider amending AB 3068 to strike this provision.
4. Let’s get technical. Committee staff recommends the following technical changes to AB 3068:
- Explicitly require projects to be consistent with local ordinances that the bill already allows local agencies to adopt in order to implement its provisions;
- Require that the affordable housing units mandated by the bill are protected by a deed restriction; and
- Insert a missing definition of “adaptive reuse project.” The bill currently defines “adaptive reuse,” but then exclusively refers to “adaptive reuse projects” throughout its text.
5. Mandate. The California Constitution requires the state to reimburse local governments for the costs of new or expanded state mandated local programs. Because AB 3068 changes the duties of local officials and creates a new crime, Legislative Counsel says that the bill imposes a new state mandate. AB 3068 disclaims the state's responsibility for providing reimbursement by citing local governments’ authority to charge for the costs of implementing the bill’s provisions and because the costs are due to expanding a crime.
6. Charter city. The California Constitution allows cities that adopt charters to control their own “municipal affairs.” In all other matters, charter cities must follow the general, statewide laws. Because the Constitution doesn't define “municipal affairs,” the courts determine whether a topic is a municipal affair or whether it's an issue of statewide concern. AB 3068 says that it applies to charter cities, but the bill does not include any supporting legislative findings that it addresses a matter of statewide concern. The Committee may wish to consider amending AB 3068 to include findings and declarations stating why the bill addresses a matter of statewide concern.
7. Related legislation. The Legislature is considering several other measures that seek to further adaptive reuse:
- AB 2488 (Ting) allows the City and County of San Francisco to establish a downtown revitalization and economic recovery financing district to finance office-to-residential conversion projects with incremental tax revenues generated by conversion projects within the district. AB 2488 is currently pending in this Committee.
- AB 2909 (Santiago) allows, until January 1, 2036, existing buildings that are at least 30 years old located within the City of Los Angeles to be eligible for the property tax benefits provided by the Mills Act for purposes of adaptive reuse of the property. AB 2909 is currently pending in this Committee.
8. Coming and going. The Senate Rules Committee has ordered a double referral of AB 3068: first to the Committee on Local Government to consider issues related to local parking authority, and second to the Committee on Housing.
Assembly Actions
Assembly Housing and Community Development Committee: 9-0
Assembly Local Government Committee: 6-1
Assembly Appropriations Committee: 11-3
Assembly Floor: 58-5
Support and Opposition
(6/7/24)
Support:
Yimby Action (Sponsor)
Abundant Housing LA
Advance Sf
Bay Area Council
California Apartment Association
California Community Builders
California Yimby
Circulate San Diego
Civicwell
East Bay Yimby
Fieldstead and Company, INC.
Greenlining Institute; the
Grow the Richmond
Housing Action Coalition
Housing Trust Silicon Valley
Mountain View Yimby
Napa-Solano for Everyone
Northern Neighbors
Peninsula for Everyone
Progress Noe Valley
San Francisco Yimby
San Luis Obispo Yimby
Santa Cruz Yimby
Santa Rosa Yimby
South Bay Yimby
Southside Forward
Spur
Streets for People
Urban Environmentalists
Ventura County Yimby
Opposition: California Special Districts Association
City of Santa Clarita
League of California Cities
-- END --
ASSEMBLY THIRD READING
ATR Bill Id:AB 3068
Author:(Haney)
As Amended Ver:April 18, 2024
Majority vote
SUMMARY
Establishes the Office to Housing Conversion Act (Act), creating a streamlined, ministerial approvals process for adaptive reuse projects (projects), and provides certain financial incentives for the adaptive reuse of existing buildings.
Major Provisions
- Establishes a streamlined, ministerial approval process for projects via the Act, as follows:
- Deems an adaptive reuse project a use "by-right" in infill locations, regardless of the underlying zoning, except that the nonresidential uses of a proposed mixed-use project must comply with the underlying zoning, or continue existing nonconforming use;
- Requires the adaptive reuse project to comply with certain standards and processes related to historic preservation if the existing building is more than 50 years old;
- Requires the project to apply with any applicable local housing affordability requirements, or on-site affordability provisions as specified, whichever is higher;
- Requires at least one-half of the square footage of the project to be residential;
- Requires a Phase I environmental assessment, and Phase II environmental assessment, if warranted, and any subsequent environmental mitigation or studies, as specified;
- Allows adaptive reuse projects to include the development of new residential or mixed-use structures on undeveloped areas and parking areas on the parcels adjacent to the proposed project site if certain requirements are met;
- Requires a local government to approve an adaptive reuse project meeting the objective planning standards in a streamlined, ministerial process within a certain timeframe;
- Allows development proponents to request modifications to adaptive reuse projects approved before the final building permit is issued if the modifications are consistent with the objective planning standards in effect when the original application was submitted, with some exceptions;
- Prohibits local governments from imposing automobile parking standards on the adjacent portion of the project if it meets specific conditions. If the conditions specified in the Act are not met, parking requirements cannot exceed one space per unit;
- Requires local governments to issue post-entitlement permits for approved adaptive reuse projects in the manner specified, without unreasonable delays, and without imposing any additional requirements that are not typically required for other projects;
- Prohibits the use of discretionary powers when approving public improvements required for the project on local government land;
- Prohibits a local government from imposing any special requirements, such as increased fees inclusionary housing requirements, that do not apply to other housing developments that do not receive streamlined, ministerial approvals under the Act;
- Exempts adaptive reuse projects from all impact fees that are not directly related to the impacts resulting from the change of use of the site from nonresidential to residential or mixed use. Requires fees charged to be proportional to the difference in impacts caused by the change of use. This does not apply to any adjacent portion of the project; and
- Gives Department of Housing and Community Development (HCD) enforcement authority over the Act.
- Authorizes local governments to establish an Adaptive Reuse Investment Incentive Program to fund the affordable housing requirements of the Act.
- Allows cities or special districts to contribute an amount equal to their allocated property tax revenue from the increased value of the adaptive reuse project, but not the actual property tax allocation, through the Adaptive Reuse Investment Incentive Program; and
- Enables proponents of qualified adaptive projects to receive incentive funds, upon written request by the proponent and approval by the local government, for up to 15 years, starting the fiscal year after the project is issued a certificate of occupancy.
COMMENTS
Statewide Housing Needs: According to HCD's 2022 Statewide Housing Plan Update,[1] California's housing crisis is a half-century in the making. After decades of underproduction, supply is far behind need, and housing and rental costs are soaring. One in three households in the state doesn't earn enough money to meet their basic needs. To meet this housing need, HCD determined that California must plan for more than 2.5 million new homes, and no less than one million of those homes must be affordable to lower-income households, by 2030.
Cost of building housing: It is expensive to build housing in California. The UC Berkeley Terner Center finds that challenging macroeconomic conditions, including inflation and high interest rates, affect the availability and cost of capital, resulting in rising costs for labor and materials.[2] Furthermore, workforce and supply shortages have exacerbated the already high price of construction in California, and economic uncertainty has made equity partners and lenders apprehensive about financing new housing development proposals.[3]
Adaptive Reuse: Adaptive reuse is the process of converting an existing non-residential building to housing. The ability to adaptively reuse a building is dependent on the initially designed use. For example, warehouses and big box retail could not functionally be adaptively reused, because their tall ceilings, single stories, and rudimentary plumbing would need to be completely reconstituted to be appropriate for human habitation. Office buildings maintain some potential for conversion, because their multi-floor layout is conducive to housing; however, the large floor plate configuration of most office buildings makes it difficult to provide the necessary light and air required for residential units throughout the entire building. For these conversions to occur, it must be financially attractive to the property owner – something that has recently increased due to the sharp downturn in the downtown office market since the COVID-19 pandemic.
The buildings most readily converted to housing are hotels and motels. These uses are already divided into quarters designed for short-term human habitation, and units can readily be converted to housing with the addition of kitchens. The viability of this conversion is visible in the success of Homekey, which created over 15,000 homes to date, with a cost of approximately $306,000 per unit - substantially less than the current cost to build newly constructed housing.
A local example of successful adaptive reuse can be found in the City of Los Angeles' Adaptive Reuse Ordinance (ARO). ARO has been a significant policy tool in revitalizing underused buildings within the city's downtown area. Introduced in 1999, the Ordinance was designed to facilitate the conversion of existing commercial buildings into residential or mixed-use properties. By easing certain local requirements, the ARO enabled developers to transform vacant or underutilized office buildings, theaters, and other commercial structures into housing. Since its inception, the ARO helped to create over 12,000 homes in downtown Los Angeles.
This bill would make the adaptive reuse of existing buildings mixed-use projects an allowable use in infill areas. This bill would allow for the new construction of mixed-use developments on vacant or underutilized parcels adjacent to an adaptive reuse project. Local governments would be required to approve a project that met the bill's specifications in an expedited timeframe.
Adaptive Reuse Funding: The Legislature has taken multiple actions to support adaptive reuse. HCD's Homekey program has allocated approximately $3.5 billion to convert hotels and motels to housing Californians at risk of, or experiencing, homelessness. The 2022-2023 budget included a $450 million General Fund allocation to convert existing buildings to affordable housing. AB 1695 (Santiago) Chapter 639, Statutes of 2022 requires any notice of funding availability issued by HCD for an affordable multifamily housing program to include adaptive reuse as an eligible activity. SB 451 (Atkins) Chapter 703, Statutes of 2019, established a $50 million program to facilitate the rehabilitation, including adaptive reuse, of historic buildings.
To help offset the costs associated with adaptive reuse projects, this bill would provide financial incentives for adaptive reuse projects by authorizing local agencies to establish an Adaptive Reuse Investment Incentive Program, through which an amount up to or equal to 15 years' worth of the amount of ad valorem property tax revenues could be transferred to the owners of qualifying adaptive reuse projects to subsidize the affordability requirements. It would also align program requirements to encourage the utilization of existing programs such as the Federal Historic Tax Credit, the newly adopted California Historic Tax Credit, the Mills Act, and the California Historical Building Code. Lastly, the bill would limit a local government's ability to charge impact fees for adaptive reuse projects that are not directly related to the impacts resulting from the change of use of the site from nonresidential to residential.
According to the Author:
"COVID-19 permanently altered the way humans approach work. In the post pandemic era, many businesses realized that developments in technology allow them to move away from the 9 to 5 commuter model that kept downtown office buildings full of people during the work week. As the capital of technological innovation, California has been particularly impacted by this transition as more and more tech companies shift to offering remote work as a benefit to their employees. A major downside to this transition is California's emptying downtown business districts. Office vacancies across the state have hit record highs with Los Angeles and San Francisco both reaching over 30% vacancy rates. Many economists are theorizing that unless local and state governments act quickly, downtowns may be facing a doom-loop scenario with empty, devalued buildings leading to a severe decrease in local government tax bases, leading to decreased services and blight.
Converting vacant office buildings into new residential units will not only stop doom-loop scenarios, it will also revitalize and enliven business districts that often became ghost towns after 5pm. California also continues to suffer from a statewide housing shortage – to address this local governments must plan for the production of more than 2.5 million homes in the next several years. Office to housing conversion is a win-win scenario that builds housing, preserves historic buildings, and creates new thriving communities in transit rich areas. California needs to get out of its own way and make office to housing conversions as easy as humanly possible. This bill does exactly that."
Arguments in Support:
According to YIMBY Action, one of the bill sponsors, "While there is desire to repurpose vacant and underutilized existing commercial buildings for residential and mixed uses, there are many challenges to doing so. Converting existing buildings to housing is sometimes lauded as more cost-effective than a new construction, but renovating an existing office building in California to allow housing is often more expensive than a complete tear-down redevelopment.
AB 3068 would create the Office to Housing Conversion Act (the Act). The Act addresses barriers to converting existing commercial buildings to housing and mixed uses, allowing more people to live closer to work centers and transit, without changing the physical character of existing neighborhoods, and helps to preserve historic buildings."
Arguments in Opposition:
According to the City of Santa Clarita, "the bill's provisions to require permits and entitlements to be conducted within 60 days if the project contains fewer than 150 housing units, and 90 days if the project is larger, jeopardizes the due diligence and responsibilities held by local governments to ensure projects are vetted to preserve public health, safety, and welfare. The City's regular entitlement and permit review process spans 6-9 months. Furthermore, the City has the tools, knowledge, and policies in place to continue to plan and develop innovative residential units that enhance the quality of life for our community. It is critical for the City to maintain local land use and zoning authority and ensure that we continue to have the ability to consider unique factors when reviewing residential development."
FISCAL COMMENTS
According to the Assembly Committee on Appropriations:
- HCD estimates minor and absorbable costs.
- Local costs resulting from this bill are not reimbursable by the state because local agencies have general authority to charge and adjust planning and permitting fees to cover their administrative expenses associated with new planning mandates.
VOTES
ASM HOUSING AND COMMUNITY DEVELOPMENT: 9-0-0
YES: Ward, Joe Patterson, Grayson, Kalra, Lee, Quirk-Silva, Reyes, Sanchez, Wilson
ASM LOCAL GOVERNMENT: 6-1-2
YES: Juan Carrillo, Kalra, Pacheco, Ramos, Ward, Wilson
NO: Waldron
ABS, ABST OR NV: Essayli, Valencia
ASM APPROPRIATIONS: 11-3-1
YES: Wicks, Arambula, Bryan, Calderon, Wendy Carrillo, Mike Fong, Friedman, Haney, Hart, Pellerin, Villapudua
NO: Sanchez, Dixon, Jim Patterson
ABS, ABST OR NV: Ta
UPDATED
VERSION: April 18, 2024
CONSULTANT: Dori Ganetsos / H. & C.D. / (916) 319-2085 FN: 0002920
Date of Hearing: May 8, 2024
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Buffy Wicks, Chair
ABPCA Bill Id:AB 3068
Author:(Haney) – As Amended Ver:April 18, 2024
Policy Committee: | Housing and Community Development | Vote: | 9 - 0 |
Local Government | 6 - 1 | ||
|
|
Urgency: No State Mandated Local Program: Yes Reimbursable: No
SUMMARY:
This bill establishes the Office to Housing Conversion Act, which creates a streamlined, ministerial approval process for adaptive reuse projects, as defined, and provides certain financial incentives for the adaptive reuse of existing buildings.
Specifically, this bill:
- Deems an adaptive reuse project a use “by right” in all zones, regardless of the zoning of the site, and subject to a streamlined, ministerial review process if the project meets specified requirements. Among these requirements, an adaptive reuse project must (a) be proposed for an existing building less than 50 years old or that meets certain requirements regarding the preservation of historic resources, (b) meet specified affordability criteria, and (c) require at least one-half of the square footage of the project be dedicated to residential uses.
- Allows an adaptive reuse project to include the development of new residential or mixed-use structures on undeveloped areas and parking areas on the parcels adjacent to the proposed adaptive reuse project site if certain conditions are met.
- Requires the proponent of an adaptive reuse project subject to these provisions to certify to the local government that specified labor prevailing wage, apprenticeship, and health care expenditure requirements are satisfied, as specified.
- Exempts an adaptive reuse project from all impact fees not directly related to the impacts resulting from the change of use of the site from nonresidential to residential or mixed use.
- By establishing the streamlined, ministerial review process described above, exempts the approval of adaptive reuse projects subject to those processes from the California Environmental Quality Act (CEQA).
- Authorizes local governments to establish an adaptive reuse investment incentive program, as specified:
- Beginning in fiscal year 2024-25, the governing body of a city or county may establish an adaptive reuse investment incentive fund by ordinance or resolution.
- Cities or special districts can contribute an amount equal to their allocated property tax revenue from the increased value of the adaptive reuse project, but not the actual property tax allocation, through the adaptive reuse investment incentive program.
- Proponents of qualified adaptive projects can receive incentive funds, upon written request by the proponent and approval by the local government, for up to 15 years, starting the fiscal year after the project is issued a certificate of occupancy.
FISCAL EFFECT:
- The Department of Housing and Community Development (HCD) estimates minor and absorbable costs.
- Local costs resulting from this bill are not reimbursable by the state because local agencies have general authority to charge and adjust planning and permitting fees to cover their administrative expenses associated with new planning mandates.
COMMENTS:
- Purpose. According to the author:
Office vacancies across the state have hit record highs with Los Angeles and San Francisco both reaching over 30% vacancy rates. Many economists are theorizing that unless local and state governments act quickly, downtowns may be facing a doom-loop scenario with empty, devalued buildings leading to a severe decrease in local government tax bases, leading to decreased services and blight. Converting vacant office buildings into new residential units will not only stop doom-loop scenarios, it will also revitalize and enliven business districts that often became ghost towns after 5pm. Office to housing conversion is a win-win scenario that builds housing, preserves historic buildings, and creates new thriving communities in transit rich areas. California needs to get out of its own way and make office to housing conversions as easy as humanly possible. This bill does exactly that.
- Background. HCD indicates California must plan for more than 2.5 million new homes, one million of which must be affordable to lower-income households. By contrast, housing production in the past decade has been under 100,000 units per year – including less than 10,000 units of affordable housing per year.
The state has taken a series of recent actions to address land use and regulatory constraints to new housing production, including the passage of AB 2011 (Wicks, Chapter 647, Statutes of 2022), which allows housing to be built in areas zoned for commercial uses and provides eligible developments a streamlined, ministerial approvals process, exempt from most local approval processes and review under CEQA. Eligible projects must meet affordability, labor, and other standards. Projects can be 100% affordable housing or mixed-income housing and must occur within infill areas.
This bill deems an adaptive reuse project a use by right in all zones, regardless of the zoning of the site, provided the project meets specified criteria.
The Legislature has also taken multiple actions to support adaptive reuse – the process of converting an existing non-residential building to housing. HCD’s Homekey program has allocated approximately $3.5 billion to convert hotels and motels to housing Californians at risk of, or experiencing, homelessness. Additionally, the 2022-2023 budget included $450 million one-time General Fund to convert existing commercial or office space to affordable housing. AB 1695 (Santiago, Chapter 639, Statutes of 2022) requires any notice of funding availability issued by HCD for an affordable multifamily housing loan and grant program to state adaptive reuse of a property for an affordable housing purpose is an eligible activity. SB 451 (Atkins, Chapter 703, Statutes of 2019), established a $50 million program administered by the Office of Historic Preservation (OHP) and the California Tax Credit Allocation Committee (CTCAC) for the purpose of facilitating the rehabilitation, including adaptive reuse, of historic buildings.
This bill provides additional financial incentives to support adaptive reuse projects.
- Related Legislation. AB 2243 (Wicks), of this legislative session, expands the applicability of the streamlined, ministerial local review and approval process for affordable and mixed-use housing developments in commercial zonings provided in AB 2011 (Wicks) to include conversion of office buildings to residential uses, among other changes.
Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081
Date of Hearing: April 24, 2024
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Juan Carrillo, Chair
ABPCA Bill Id:AB 3068 (
Author:Haney) – As Amended Ver:April 18, 2024
SUBJECT: Adaptive reuse: streamlining: incentives
SUMMARY: Establishes the Office to Housing Conversion Act, creating a streamlined, ministerial approvals process for adaptive reuse projects, as defined, and provides certain financial incentives for the adaptive reuse of existing buildings. Specifically, this bill:
- Defines the following terms related to the adaptive reuse investment incentive program:
- “Adaptive reuse investment incentive funds” means, with respect to a qualified adaptive reuse project property for a relevant fiscal year, an amount up to or equal to the amount of ad valorem property tax revenue allocated to the participating local agency, excluding the revenue transfers required by education allocations, as specified, from the taxation of that portion of the total assessed value of the real and personal property of an adaptive reuse project property that is in excess of the qualified adaptive reuse project property’s valuation at the time of the proponent’s initial request for funding.
- “Program” means an adaptive reuse investment incentive program established pursuant to this bill.
- Proponent” means a party or parties that meet all of the following criteria:
- The party is named in the application for a permit to construct a qualified adaptive reuse project submitted to the city or county.
- The party will be the fee owner of the qualified adaptive reuse project property upon the completion of that development.
- Allows a city or a county to establish an adaptive reuse investment incentive program, beginning the 2024-25 fiscal year.
- Requires a city or county that establishes an adaptive reuse incentive program to pay adaptive reuse investment incentive funds to the qualified adaptive reuse project to subsidize the affordable housing units, upon approval by a majority of the entire membership of the city’s and county’s governing body.
- Requires that requests for the payment of adaptive reuse investment funds to be filed by a proponent with the governing body of the city or county in the time and manner established by that governing body.
- Provides that if a city and county approves a request for the payment of adaptive reuse incentive funds, payment of the funds shall begin within the first fiscal year after the qualified reuse property is issued a certificate of occupancy.
- Allows a city or special district to pay the city or county an amount equal to the amount of ad valorem property tax revenue allocated to that city or special district, but not the actual allocation, derived from the taxation of that portion of the total assessed value of that real property that is in excess of the property’s valuation at the time of the proponent’s initial request for funding, for the purpose of subsidizing the affordable housing units required pursuant to this bill.
- Adds the “Office to Housing Conversion Act” to the list in existing law that requires the Department of Housing and Community Development (HCD) to provide notice to the city, county, or city and county if the city or county is in violation of state law. HCD may notice the Attorney General to enforce state law.
- Establishes the Office Housing Conversion Act (Act).
- Defines for purposes of the Act, the following terms:
- “Adaptive reuse” means the retrofitting and repurposing of an existing building to create new residential or mixed uses including office conversion projects. “Adaptive reuse” shall not include the retrofitting and repurposing of any light industrial use, unless the planning director or equivalent position determines that the specific light industrial use is no longer useful for industrial purposes.
- “Adjacent portion of the project” means the portion of the project located on a site adjacent to the proposed repurposed existing building.
- “Broadly applicable housing affordability requirement” means a local ordinance or other regulation that requires a minimum percentage of affordable units and that applies to a variety of housing development types or entitlement pathways.
- “Impact fee” means any fee imposed pursuant to the Mitigation Fee Act.
- “Historical resource” means the same as defined in subdivision (j) of Section 5020.1 of the Public Resources Code, or a resource listed in the California Register of Historical Resources, as specified.
- “Light industrial use” means a use that is not subject to permitting by a district, as defined.
- “Local affordable housing requirement” means either of the following:
- A local government requirement that a housing development project include a certain percentage of units affordable to, and occupied by, extremely low, very low, lower, or moderate-income households as a condition of development of residential units.
- A local government requirement allowing a housing development project to be a use by right if the project includes a certain percentage of units affordable to, and occupied by, extremely low, very low, lower, or moderate-income households as a condition of development of residential units.
- “Local government” means a city, including a charter city, a county, or a city and county.
- “Mixed use” means residential uses combined with at least one other land use, but not including any industrial use.
- “Office conversion project” means the conversion of a building used for office purposes or a vacant office building into residential dwelling units.
- “Persons and families of low or moderate income” means the same as defined in Section 50093 of the Health and Safety Code.
- “Phase I environmental assessment” means the same as defined in Section 78090 of the Health and Safety Code.
- “Phase II environmental assessment” means the same as defined in Section 25403 of the Health and Safety Code.
- “Preliminary endangerment assessment” means the same as defined in Section 78095 of the Health and Safety Code.
- “Residential uses” includes, but is not limited to, housing units, dormitories, boarding houses, and group housing. “Residential uses” does not include prisons or jails.
- Allows a local government to adopt an ordinance to implement this bill and specifies the process and requirements applicable to adaptive reuse projects, provided that the ordinance is consistent with, and does not inhibit the objectives of, the bill.
- Finds and declares that this bill is a matter of statewide concern and applies to all cities, including charter cities.
- Establishes that adaptive reuse projects that meet specified requirements outlined in 10) below shall be deemed by-right in all zones, and subject to the streamlined, ministerial review process, except that the nonresidential uses of a proposed mixed-use adaptive reuse project shall be consistent with the land uses allowed by the zoning or a continuation of an existing zoning nonconforming use.
- Requires an adaptive reuse project to comply with all of the following requirements in order to use a streamlined, ministerial approval:
- The adaptive reuse project and site are located on a site that satisfies both of the following:
- It is a legal parcel or parcels located in a city if the city boundaries include some portion of either an urbanized area or urban cluster or, for unincorporated areas, a legal parcel or parcels wholly within the boundaries of an urbanized area or urban cluster.
- At least 75 percent of the perimeter of the site adjoins parcels that are developed with urban uses.
- The adaptive reuse project is proposed for any of the following:
- An existing building that is less than 50 years old.
- An existing building that is listed on a local, state, or federal register of historic resources and the adaptive reuse project proponent complies with this bill.
- An existing building that is more than 50 years old and the local government has evaluated the site through a preliminary application that the building or site is a historic resource and the adaptive reuse project complies with this bill OR the site is not a historic resource.
- Requires adaptive reuse projects for rental housing to meet either of the following affordability requires:
- 8% of the units shall be affordable to very-low income households and 5% of the units for extremely low income households.
- 15% of the units shall be affordable to lower income households
- Requires the development proponent to agree to the continued affordability of all affordable units for 55 years.
- Requires adaptive reuse projects for owner-occupied housing to comply with either of the following affordability requirements:
- 30% of the units shall be affordable to moderate-income households, as defined.
- 15% of the units shall be affordable to lower income households, as defined.
- Requires the developer to agree to the continued affordability of all affordable units for ownership for 45 years.
- Requires the housing development project to comply with all of the following when a local government has a local affordable housing requirement:
- Requires the development project to include the percentage of affordable units required by the bill or the local requirement, whichever is higher.
- Requires the development project to meet the lowest income targeting require by either bill or the local requirement.
- Requires, in cases where the local affordable housing requirement is greater than 15% for lower income households and does not require the inclusion of units affordable to very low and extremely low income households, the rental housing development to do bother of the following:
- Include 8% of the units for very low income households and 5% of the units for extremely low households.
- Subtract 15% of units affordable to lower income households required by the local policy at the highest required affordability level.
- Requires the development project to have the same bedroom and bathroom count ratio for the affordable units as the market rate units, that the affordable units be equitably distributed within the project, and that affordable units have the same type or quality of appliances, fixture, and finishes as the market rate units.
- Requires that, at minimum, 50% of the square footage of an adaptive reuse project that includes mixed uses be dedicate to residential uses.
- Requires the adaptive reuse project to complete a Phase I environmental assessment and, if warranted, a Phase II environmental assessment.
- Requires the project proponent to remove or mitigate for hazardous substances found on the site, if any.
- The adaptive reuse project and site are located on a site that satisfies both of the following:
- Allows an adaptive reuse project that satisfies the requirements of 10) above to include the development of new residential or mixed-use structures on undeveloped areas and parking area on the parcels adjacent to the proposed adaptive reuse project site, if all of the following are met:
- The project on the site adjacent to the repurposed building complies with any of the following:
- The development is consistent with object zoning standards, objective subdivision standards, and objective design review standards.
- The development meets the requirements of the Affordable Housing and High Road Jobs Act of 2022 (Chapter 4.1 (commencing with Section 65912.100). (AB 2011)
- The requirements of the Middle Class Housing Act of 2022 (Section 65852.24).
- The development is located on a parcel or parcels that are located in a city or unincorporated area within an urbanized area or urban cluster and 75% of the perimeter is adjoined to parcels that are development with urban uses.
- The development is not located in the coastal zone.
- The development is not located on a site that would require the demolition of affordable housing, the sites was previously use for housing and was occupied in the past 10 years, requires the demolition of a historic structure, or the property contains units that are occupied by tenants or contains units that were offered up for sale to the general public.
- The site does not contain tribal cultural resources, as specified.
- The existing open space on the proposed project is not a contributed to a historic resource.
- The project on the site adjacent to the repurposed building complies with any of the following:
- Establishes that the portion of the project that is adjacent to the adaptive reuse project is eligible for density bonus, incentives, or concessions, waivers, or reductions of development standards, and parking ratios, as defined.
- Defines “adjacent portion of the project” to mean the portion of the project located on the site adjacent to the proposed repurposed building.
- Requires a development proponent to notify the local government about its intent to submit a development application for an adaptive reuse project for a structure that is more than 50 years and not listed on a local, state, or federal register, of historic resources.
- Requires a local government to evaluate the project site for historical resources upon received a notice of intent from a development proponent. Requires a local government to make a determination within 90 days of receiving the notice of intent.
- Requires, in cases where the structure is or is part of historic resource or if the site has been found to be a significant historic resource, the adaptive reuse project proponent to sign an affidavit declaring that the project will only move forward if it complies with either of the following:
- The United States Secretary of the Interior’s Standards for Rehabilitation, as specifed.
- The project is awarded federal historic rehabilitation tax credits pursuant or state historic rehabilitation tax credits, as specified.
- Requires, in cases where a project proponent does not sign an affidavit for a site that is listed on a local, state, or historic register, the local government to process the adaptive reuse project. However, the local government may deny or conditionally approve the project if they local government makes a finding that the project will cause a significant adverse impact to the historic resources. Allows a local government to impose condition of approval mitigate adverse impact to the historic resource and to comply with the United States Secretary of the Interior’s Standards for Rehabilitation, but the local government shall not impose other condition of approval.
- Provides that the review of an adaptive reuse project shall not constitute a “project” for purposes of the California Environmental Quality Act (CEQA).
- Requires a local government to approve an adaptive reuse project if the local government’s planning director or equivalent position determines that the project is consistent with object planning standards, as defined.
- Requires, if the planning director or equivalent position finds that the project is not consistent with object planning standards, a local government to provide the project proponent with written documentation of standards the project conflicts with and an explanation for the reason or reasons the development conflicts with that standard or standards, as follows:
- Within 60 days of submittal of the adaptive reuse project to the local government pursuant to this section if the project contains 150 or fewer housing units.
- Within 90 days of submittal of the adaptive reuse project to the local government pursuant to this section if the project contains more than 150 housing units.
- If the local government fails to provide the required documentation identifying why a project is not compliant with objective planning standards, then the project is deemed compliant.
- Requires a local government to determine that an adaptive reuse project and all related application for modifications is consistent object planning standards if there is substantial evidence in the record for a reasonable person to conclude that the project is consistent with object planning standards.
- Requires all departments of a local government that are required to provide approval to an adaptive reuse project to comply with the time periods in 18) above.
- Specifies that any design review of the adjacent portion of the project may be conducted by the planning commission or any equivalent board or commission for design review. Prohibits the design review process to be consistent with all objective standards and shall not chill or preclude ministerial approval within the following time periods:
- Within 90 days of submittal of the adaptive reuse project to the local government pursuant to this section if the project contains 150 or fewer housing units.
- Within 180 days of submittal of the qualified adaptive reuse project to the local government pursuant to this section if the project contains more than 150 housing units.
- Provides that an adaptive reuse project that is consistent with all objective planning standards and consistent with all objective subdivision standards shall be exempt from CEQA and shall be subject to public oversight timelines in 21).
- Requires a local government to provide the project proponent written documentation of which objective standard or standards the adaptive reuse project conflicts with, and an explanation for the reason or reasons the project conflicts with, that objective standard or standards consistent with the timelines described in 18) above.
- Prohibits a local government from imposing automobile parking requirement on project on the adjacent portions of the adaptive reuse projects in any of the following instances:
- The adjacent portion of the project is within one-half mile of public transit.
- The adjacent portion of the project is within and architecture and historically significant historic district.
- When on-street parking permits are required but not offered to the occupants of the adjacent portion of the project.
- When there is a car share vehicle located within one block of the adjacent portion of the project.
- Prohibits a local government from imposing parking requirements that exceed one parking space per unit for adjacent projects not on sites described in 24) above.
- Prohibits a local government from requiring any of the following prior to approving an adaptive reuse project that meets the requirements of the bill.
- Studies, information, or other materials that do not pertain directly to determining whether the adaptive reuse project is consistent with the objective planning standards applicable to the development.
- Compliance with any standards necessary to receive a postentitlement permit, as defined.
- Clarifies that a local government may still require a project to comply with standards necessary to receive a postentitlement permit after, as defined, a permit has been issued pursuant to this bill.
- Provides that local government’s approval of a project shall not expire if the project meets both of the following requirements:
- The project includes public investment in housing affordability, beyond tax credits.
- At least 20% of the units are affordable to households making at or below 80 percent of the area median income.
- Provides that a local government’s approve of a project shall remain valid for 3 years from the date of the final action of the approval or upon the date of the final judgement upholding that approval for projects that do not fall under 27). Clarifies that the approval shall remain valid for a project under going construction and “in progress,” as defined.
- Allows a local government to grant a one-time, one-year extension if the project proponent can prove that there has been significant progress toward getting the adaptive reuse project construction ready.
- Provides that the time during which the approval is valid will be extended if the project proponent request modifications of the project to capture the approval of the modification, plus an additional 180 days.
- Allows that development proponent to request a modification to a qualified adaptive reuse project that have been approved under the streamlined approval process if that request is submitted to the local government before the issuance of the final building permit required for construction.
- Requires the local government to approve the modification if it determines that the medication consistent with the objective planning standard that were in effect when the original adaptive reuse project application was first submitted.
- Require the local government to evaluate any modification with the same assumptions and analytical methodology that the local government originally used to assess consistency for the adaptive reuses project that was approved for streamlined, ministerial approval.
- Requires the local government to determine if the requested modification is consistent with the objective planning standards, as specified, and shall approve or deny the modification request within 60 days after the submission of the request, or within 90 days if the design review is required.
- Allows a local government to apply objective planning standards to an adjacent portion of the project adopted after the project application was first submitted to the requested modification in any of the following instances:
- The adjacent portion of the project is revised that the total number of residential units or total square footage of the construction changes by 15% or more.
- The adjacent portion of the project is revised such that the total number of residential units or total square footage changes by 5% or more and it is necessary to subject the project to an objective standard beyond those in effect at the time of the initial application to avoid an adverse impact, as defined.
- Objective building standards relating to building, plumbing, electrical, fire and grading, may be applied to all modification application submitted prior to the first building permit.
- Provides that a local government’s review of a modification request is strictly limited to determining whether the modification affects the project’s consistency with the objective planning standards and shall not be reconsider prior determination that are not affected by the modification.
- Requires a local government to issue a permit required for an adaptive reuse project if the application substantially complies with the project as it was initially approved. Requires the local government to process the application without unreasonable delay and shall not impose any additional procedures not approved by this bill. Provides that issuance of any subsequent permits, as defined, shall not inhibit, chill, or preclude the adaptive reuse project.
- Prohibits a local government from exercising discretion in approving a permit relating to a public improvement, as specified, on land owned by local government. Approval of a permit relating to a public improvement shall not inhibit, chill, or preclude the project.
- Requires a local government to do all of the following when it receives an application for a public improvement:
- Consider the application based upon objective standards that were in effect when the original project application was submitted.
- Conduct its review and approval in the same manner as it would evaluate the public improve by a project that is not eligible for ministerial approval.
- Prohibits a local government from doing any of the following when it receives an application for a public improvement:
- Adopting or imposing requirement that apply to project solely or partially on that basis that the project is eligible for ministerial approval.
- Delayed its consideration, review, or approval of the application.
- Prohibits a local government from adopting or imposing any requirement, including, but not limited to, increased fees or inclusionary housing requirements, that applies to a project solely or partially on the basis that the project is eligible to receive ministerial or streamlined approval pursuant to this article.
- Provides that this bill shall not affect a project proponent’s ability to use any alternative streamlined by right permit processing adopted by a local government.
- Provides that projects under this bill also qualify as a housing development project entitled to the protections of the Housing Accountability Act.
- Provides that alterations to an existing building necessary to comply with the California Building Standards Code, International Existing Building Code, or California Historical Building Code shall not disqualify a qualified adaptive reuse project from the streamlined, ministerial review process established under this article.
- An adaptive reuse project approved by a local government pursuant to this part shall meet all of the following labor standards:
- The development proponent shall require in contracts with construction contractors, and shall certify to the local government, that the standards specified in this section will be met in project construction.
- A development that is not in its entirety a public work, as defined, and approved by a local government, as specified, shall be subject to all of the following:
- All construction workers employed in the execution of the development shall be paid at least the general prevailing rate of per diem wages for the type of work and geographic area, as specified, except that apprentices registered in programs approved by the Chief of the Division of Apprenticeship Standards may be paid at least the applicable apprentice prevailing rate.
- The development proponent shall ensure that the prevailing wage requirement is included in all contracts for the performance of the work for those portions of the development that are not a public work.
- All contractors and subcontractors for those portions of the development that are not a public work shall comply with both of the following:
- Pay to all construction workers employed in the execution of the work at least the general prevailing rate of per diem wages, except that apprentices registered in programs approved by the Chief of the Division of Apprenticeship Standards may be paid at least the applicable apprentice prevailing rate.
- Maintain and verify payroll records, as specified, and make those records available for inspection and copying as provided in that section, except that if all contractors and subcontractors performing work on the development are subject to a project labor agreement that requires the payment of prevailing wages to all construction workers employed in the execution of the development and provides for enforcement of that obligation through an arbitration procedure.
- The obligation of the contractors and subcontractors to pay prevailing wages pursuant to this section may be enforced by any of the following:
- The Labor Commissioner through the issuance of a civil wage and penalty assessment, which may be reviewed within 18 months after the completion of the project.
- An underpaid worker through an administrative complaint or civil action.
- A joint labor-management committee through a civil action under Section 1771.2 of the Labor Code.
- If a civil wage and penalty assessment is issued pursuant to this section, the contractor, subcontractor, and surety on a bond or bonds issued to secure the payment of wages covered by the assessment shall be liable for liquidated damages, as specified.
- Provides that (c) shall not apply if all contractors and subcontractors performing work on the development are subject to a project labor agreement that requires the payment of prevailing wages to all construction workers employed in the execution of the development and provides for enforcement of that obligation through an arbitration procedure.
- Requires that employer payments not reduce the obligation to pay the hourly straight time or overtime wages found to be prevailing does not apply to those portions of development that are not a public work if otherwise provided in a bona fide collective bargaining agreement covering the worker.
- Clarifies that the requirement to pay at least the general prevailing rate of per diem wages does not preclude use of an alternative workweek schedule, as defined.
- “Project labor agreement” has the same meaning as set forth in paragraph (1) of subdivision (b) of Section 2500 of the Public Contract Code.
- Requires a development of 50 or more housing units approved by a local government to be subject to all of the following:
- Requires the development proponent to require contracts with construction contractors and shall certify to the local government that each contractor of any tier who employs construction craft employees or will let subcontracts for at least 1,000 hours satisfies the requirements in subdivisions b) and c). A construction contractor is deemed in compliance with subdivisions b) and c) if it is signatory to a valid collective bargaining agreement that requires utilization of registered apprentices and expenditures on health care for employees and dependents.
- Requires a contractor with construction craft employees to either participate in an apprenticeship program approved by the California Division of Apprenticeship Standards or request the dispatch of apprentices from a state-approved apprenticeship program. A contractor without construction craft employees shall show a contractual obligation that its subcontractors comply with this subdivision.
- Requires each contractor with construction craft employees to make health care expenditures for each employee in an amount per hour worked on the development equivalent to at least the hourly pro rata cost of a Covered California Platinum level plan for two 40-year-old adults and two dependents 0 to 14 years of age for the Covered California rating area in which the development is located. A contractor without construction craft employees shall show a contractual obligation that its subcontractors comply with this subdivision. Qualifying expenditures shall be credited toward compliance with prevailing wage payment requirements set forth in Section 65912.130.
- Requires the development proponent to provide to the local government, on a monthly basis while its construction contracts on the development are being performed, a report demonstrating compliance with subdivisions b) and c). The reports shall be considered public records under the California Public Records Act and shall be open to public inspection.
- A development proponent that fails to provide the monthly report shall be subject to a civil penalty for each month for which the report has not been provided, in the amount of 10 percent of the dollar value of construction work performed by that contractor on the development in the month in question, up to a maximum of ten thousand dollars ($10,000). Any contractor or subcontractor that fails to comply with subdivision b) or c) shall be subject to a civil penalty of two hundred dollars ($200) per day for each worker employed in violation of b) and c) above.
- Allows penalties to be assessed by the Labor Commissioner within 18 months of completion of the development using the procedures for issuance of civil wage and penalty assessments, as specified, and may be reviewed, as specified. Penalties shall be deposited in the State Public Works Enforcement Fund, as specified.
- Requires each construction contractor to maintain and verify payroll records. Each construction contractor shall submit payroll records directly to the Labor Commissioner at least monthly in a format prescribed by the Labor Commissioner, as specified. The records shall include a statement of fringe benefits. Upon request by a joint labor-management cooperation committee established pursuant to the Federal Labor Management Cooperation Act of 1978 (29 U.S.C. Sec. 175a), the records shall be provided pursuant to subdivision (e) of Section 1776 of the Labor Code.
- Requires all construction contractors to report any change in apprenticeship program participation or health care expenditures to the local government within 10 business days, and shall reflect those changes on the monthly report. The reports shall be considered public records pursuant to the California Public Records Act and shall be open to public inspection.
- Establishes a joint labor-management cooperation committee established pursuant to have standing to sue a construction contractor for failure to make health care expenditures, as specified.
- Provides that an adaptive reuse project shall be exempt from all impact fee that are not directly related to the impacts resulting from the change of use of the site from nonresidential to residential or mixed use. Any fees charged shall be proportional to the difference in impacts caused by the change of use. This provision shall not apply to any adjacent portion of the project.
- Specifies that any impact fees imposed on an adaptive reuse project pursuant to this bill shall, at the request of the project proponent, be collected on the date the certificate of occupancy is issued.
- Provides that an adaptive reuse project proponent that requests for impact fees to be collected on the date the certificate of occupancy is issued, shall be required to execute a contract to pay the fees, or applicable portion thereof, within the time specified.
- Specifies that the obligation to pay the fees pursuant to this bill shall inure to the benefit of, and be enforceable by, the local government that imposed the fee or charge, regardless of whether it is a party to the contract. The contract shall contain a legal description of the property affected, shall be recorded in the office of the county recorder of the county and, from the date of recordation, shall constitute a lien for the payment of the fees, which shall be enforceable against successors in interest to the property owner or lessee at the time of issuance of the building permit. The contract shall be recorded in the grantor-grantee index in the name of the public agency issuing the building permit as grantee and in the name of the property owner or lessee as grantor. The local government shall record a release of the obligation, containing a legal description of the property, in the event the obligation is paid in full, or a partial release in the event the fee or charge is prorated.
- Provides that the contract executed pursuant to 48) above, may require the property owner or lessee to provide appropriate notification of the opening of any escrow for the sale of the property for which the building permit was issued and to provide in the escrow instructions that the fee or charge be paid to the local government imposing the same from the sale proceeds in escrow prior to disbursing proceeds to the seller.
EXISTING LAW:
- Establishes, pursuant to AB 1490 (Lee, Chapter 764, Statutes of 2023), a ministerial, streamlined approval process for the adaptive reuse of buildings into 100 percent affordable housing. (Government Code (GOV) § 65913.12)
- Establishes, pursuant to SB 423 (Wiener, Chapter 778, Statutes of 2023), a streamlined, ministerial approval process, not subject to CEQA, for certain infill multifamily affordable housing projects that are compliant with local zoning and objective standards and that are proposed in local jurisdictions that have not met their regional housing needs allocation. (GOV § 65913.4)
- Establishes, pursuant to AB 2011 (Wicks, Chapter 647, Statutes of 2022), a streamlined, ministerial approval process, not subject to CEQA, for certain infill multifamily affordable housing projects that are located on land that is zoned for retail, office, or parking. (GOV § 65912.100-65912.140)
- Allows, pursuant to SB 6 (Caballero Chapter 659, Statutes of 2022), the Middle Class Housing Act of 2022, residential uses on commercially zoned property without requiring a rezoning. (GOV § 65852.24)
- Authorizes the California Department of Housing and Community Development (HCD) to enforce state housing laws. (GOV § 65585)
FISCAL EFFECT: This bill is keyed fiscal and contains a state-mandated local program.
COMMENTS:
- Bill Summary. AB 3068 provides by-right ministerial approval of adaptive reuse projects that convert properties, inclusive of the structures and open space adjacent to the building, that have or may have historic significance. The bill provides financial assistance for affordable housing units required as part of the development. The bill establishes that adaptive reuse projects under the bill, adjacent development to the building eligible for adaptive reuse, or modifications to the development shall be subject to objective review and ministerial approval. These projects, adjacent development, and modifications are not subject to CEQA. The bill requires that project labor agreements require a prevailing wage and contract with construction craft employees that participate in an apprenticeship program. This bill requires that impact fees imposed on the project be collected at the time the certificate of occupancy is issued. This bill also requires that the project proponent enter into a contract with the public agencies to pay the fees by the time certificate of occupancy is specified.
- Author’s Statement. According to the author, “COVID-19 permanently altered the way humans approach work. In the post pandemic era, many businesses realized that developments in technology allow them to move away from the 9 to 5, commuter model that kept downtown office buildings full of people during the work week. As the capital of technological innovation, California has been particularly impacted by this transition as more and more tech companies shift to offering remote work as a benefit to their employees.
“A major downside to this transition is California’s emptying downtown business districts. Office vacancies across the state have hit record highs with Los Angeles and San Francisco both reaching over 30% vacancy rates. Many economists are theorizing that unless local and state governments act quickly, downtowns may be facing a doom-loop scenario with empty, devalued buildings leading to a severe decrease in local government tax bases, leading to decreased services and blight.
“Converting vacant office buildings into new residential units will not only stop doom-loop scenarios, it will also revitalize and enliven business districts that often became ghost towns after 5pm. California also continues to suffer from a statewide housing shortage – to address this local governments must plan for the production of more than 2.5 million homes in the next several years.
“Office to housing conversion is a win-win scenario that builds housing, preserves historic buildings, and creates new thriving communities in transit rich areas. California needs to get out of its own way and make office to housing conversions as easy as humanly possible. This bill does exactly that.” - Statewide Housing Needs: According to the Department of Housing and Community Development’s (HCD’s) 2022 Statewide Housing Plan Update,[1] California’s housing crisis is a half century in the making. After decades of underproduction, supply is far behind need and housing and rental costs are soaring. As a result, millions of Californians must make hard decisions about paying for housing at the expense of food, health care, child care, and transportation, directly impacting quality of life in the state. One in three households in the state doesn’t earn enough money to meet their basic needs. In 2023, over 181,000 Californians experienced homelessness on a given night, with a sharp increase in the number of people who became experienced homelessness for the first time.[2]
To meet this housing need, HCD determined that California must plan for more than 2.5 million new homes, and no less than one million of those homes must be affordable to lower-income households, in the 6th Regional Housing Needs Allocation (RHNA). This represents more than double the housing needed in the 5th RHNA cycle. As of April 5, 2024, in the 6th RHNA cycle, jurisdictions across the state have permitted the following: - 2.1 percent of the very low-income RHNA
- 4.8 percent of the low-income RHNA
- 4.8 percent of the moderate-income RHNA
- 12.7 percent of the above moderate-income RHNA
- Cost of building housing: It is expensive to build housing in California. The UC Berkeley Terner Center finds that challenging macroeconomic conditions, including inflation and high interest rates, affect the availability and cost of capital, resulting in rising costs for labor and materials.[3] Furthermore, workforce and supply shortages have exacerbated the already high price of construction in California, and economic uncertainty has made equity partners and lenders apprehensive about financing new housing development proposals.[4]
An analysis by the California Housing Partnership compares the cost of market rate development prototypes developed by the Terner Center with the median cost of developing affordable rental homes. In the four regions analyzed, the study found that the cost of developing one unit of affordable housing ranged from approximately $480,000 to $713,000, while the cost of developing one unit of market rate housing in the state ranged from approximately $508,000 to $637,000.[5] - Recent State Efforts to Address the Housing Crisis: In recent years, the state has taken a series of steps to address land use and regulatory constraints to new housing production. These include polices such as allowing accessory dwelling units by right,[6] reforming single family zoning,[7] and reforming the process local governments use to determine how much, where, and how to plan for housing. [8] The state has also enacted measures to expedite the approval of affordable housing. This includes measures to make supportive housing a by right use,[9] and make affordable and market-rate housing by right in jurisdictions where housing production is below identified targets.[10] This also includes measures to regulate and normalize the housing approval process,[11] and limit the ability of local governments to deny, delay, or diminish projects that otherwise meet all of local objective standards.[12] These recent efforts included the passage of AB 2011 (Wicks, Chapter 647, Statutes of 2022), also known as the Affordable Housing and High Road Jobs Act of 2022. AB 2011 went into effect on July 1, 2023. AB 2011 allows housing development in areas that are zoned for parking, retail, or office buildings, and provides eligible developments with a streamlined, ministerial approvals process.
- Adaptive Reuse. Adaptive reuse is the process of converting an existing non-residential building to housing. The ability to adaptively reuse a building is highly dependent on the initially designed use. For example, uses such as warehouses and big box retail could not functionally be adaptively reused, because their tall ceilings, single stories, and rudimentary plumbing would need to be completely reconstituted to be appropriate for human habitation. Office buildings maintain some potential for conversion, because their multi-floor layout is conducive to housing; however, the large floor plate configuration of most office buildings makes it difficult to provide the necessary light and air that is required for residential units throughout 100% of the building’s square footage. For these conversions to occur, it would also need to be financially attractive to the property owner – something that has recently increased due to the sharp downturn in the downtown office market since the beginning of the COVID-19 pandemic.
According to an April 24, 2020 brief published by McKinsey and Company, the onset of COVID-19 has aggravated the existing challenges that the retail sector faces, including: - A shift to online purchasing over brick-and-mortar sales;
- Customers seeking safe and healthy purchasing options;
- Increased emphasis on value for money when purchasing goods;
- Movement towards more flexible and versatile labor; and
- Reduced consumer loyalty in favor of less expensive brands.
The buildings most readily converted to housing are hotels and motels. These uses are already divided into quarters designed for short-term human habitation, and units can readily be converted to housing with the addition of kitchens. The viability of this conversion is visible in the success of Project Homekey, which has created over 15,000 units of housing to date, with a cost of approximately $306,000 per unit - substantially less than the current cost to build newly constructed housing.
A local example of successful adaptive reuse can be found in the City of Los Angeles' Adaptive Reuse Ordinance (ARO). ARO has been a significant policy tool in revitalizing underused buildings within the city's downtown area. Introduced in 1999, the Ordinance was specifically designed to facilitate the conversion of existing commercial buildings into residential or mixed-use properties. By easing certain local requirements, the ARO has enabled developers to transform vacant or underutilized office buildings, theaters, and other commercial structures into vibrant residential units, contributing to urban density and reducing the need to build on undeveloped land. Notably, the Ordinance has been quite successful in adding housing stock to the city; since its inception, the ARO has led to the creation of over 12,000 residential units in downtown Los Angeles by some estimates, significantly impacting the local housing market and revitalizing the historic core of the city.
- Adaptive Reuse Funding. In the past three years, the Legislature has taken multiple actions to support adaptive reuse. HCD’s Homekey program has allocated approximately $3.5 billion to convert hotels and motels to housing Californians at risk of, or experiencing, homelessness. Additionally, the 2022-2023 budget included $450 million one-time General Fund ($200 million in 2022-23 and $250 million in 2023-24) to convert existing commercial or office space to affordable housing. AB 1695 (Santiago, Chapter 639, Statutes of 2022) requires any notice of funding availability issued by HCD for an affordable multifamily housing loan and grant program to state that adaptive reuse of a property for an affordable housing purpose is an eligible activity. SB 451 (Atkins, Chapter 703, Statutes of 2019), established a $50 million program to be administered by the Office of Historic Preservation (OHP) and the California Tax Credit Allocation Committee (CTCAC) for the purpose of facilitating the rehabilitation, including adaptive reuse, of historic buildings.
To help offset the costs associated with adaptive reuse projects, this bill would provide financial incentives for adaptive reuse projects in the following ways: - Authorizing local agencies to establish an Adaptive Reuse Investment Incentive Program, through which an amount up to or equal to 15 years’ worth of the amount of ad valorem property tax revenues could be transferred to the owners of qualifying adaptive reuse projects;
- Aligning program requirements so as to encourage the utilization of existing programs such as the Federal Historic Tax Credit, the newly adopted California Historic Tax Credit, the Mills Act, and the California Historical Building Code; and,
- Limiting a local governments’ ability to charge impact fees for adaptive reuse projects that are not directly related to the impacts resulting from the change of use of the site from nonresidential to residential.
- Mitigation Fee Act. When approving development projects, counties and cities can require the applicants to mitigate the project's effects by paying fees—known as mitigation fees, impact fees, or developer fees. The California courts have upheld impact fees for sidewalks, parks, school construction, and many other public purposes.
When establishing, increasing, or imposing a fee as a condition of approving a development project, the Mitigation Fee Act requires local officials to:
- Identify the fee’s purpose.
- Identify the fee’s use, including the public facilities to be financed.
- Determine a reasonable relationship between the fee’s use and the development.
- Determine a reasonable relationship between the public facility’s need and the development.
- Identify the fee’s purpose.
When imposing a fee as a condition of approving a development project, the Mitigation Fee Act also requires local officials to determine a reasonable relationship between the fee’s amount and the cost of the public facility. In its 1987 Nollan decision, the U.S. Supreme Court said there must be an “essential nexus” between a project's impacts and the conditions for approval. In the 1994 Dolan decision, the U.S. Supreme Court said that conditions on development must have a "rough proportionality" to a project's impacts.
In the 1996 Ehrlich decision, the California Supreme Court distinguished between “legislatively enacted” conditions that apply to all projects and “ad hoc” conditions imposed on a project-by- project basis. Ehrlich applied the “essential nexus” test from Nollan and the “rough proportionality” test from Dolan to “ad hoc’ conditions. The Court did not apply the Nollan and Dolan tests to the conditions that were “legislatively enacted.” In other words, local officials have generally faced greater scrutiny when they impose conditions on a project-by-project basis. As a result of these decisions and the Mitigation Fee Act, local agencies have conducted nexus studies to ensure any proposed impact fees meet these legal tests for most impact fees. Other requirements in the Mitigation Fee Act ensure that impact fees are appropriately levied and spent.
On April 12 of this year, the United States Supreme Court decided Sheetz v. County of El Dorado, California. The case involved the takings clause of the Fifth Amendment to the U.S. Constitution. An El Dorado County resident challenged the county’s legislatively enacted traffic impact mitigation fee, arguing the county should only charge him based on the impact associated with his specific parcel. The main question was whether or not the same standards of “essential nexus” and “rough proportionality” apply to legislatively enacted fees as they do to ad-hoc fees.
In the Sheetz decision, the Court stated, “A legislative exception to the Nollan/Dolan test ‘conflicts with the rest of our takings jurisprudence,’ which does not otherwise distinguish between legislation and other official acts. Knick v. Township of Scott, 588 U. S. 180, 185 (2019).” The Court also proclaimed that, “...as we have explained, a legislative exception to the ordinary takings rules finds no support in constitutional text, history, or precedent. We do not address the parties’ other disputes over the validity of the traffic impact fee, including whether a permit condition imposed on a class of properties must be tailored with the same degree of specificity as a permit condition that targets a particular development. The California Court of Appeal did not consider this point—or any of the parties’ other nuanced arguments—because it proceeded from the erroneous premise that legislative permit conditions are categorically exempt from the requirements of Nollan and Dolan. Whether the parties’ other arguments are preserved and how they bear on Sheetz’s legal challenge are for the state courts to consider in the first instance.”
In addition, Justice Kavanaugh filed a concurring opinion, in which Justices Kagan and Jackson joined saying that, “I join the Court’s opinion. I write separately to underscore that the Court has not previously decided—and today explicitly declines to decide—whether ‘a permit condition imposed on a class of properties must be tailored with the same degree of specificity as a permit condition that targets a particular development.’ Ante, at 10–11. Importantly, therefore, today’s decision does not address or prohibit the common government practice of imposing permit conditions, such as impact fees, on new developments through reasonable formulas or schedules that assess the impact of classes of development rather than the impact of specific parcels of property. Moreover, as is apparent from the fact that today’s decision expressly leaves the question open, no prior decision of this Court has addressed or prohibited that longstanding government practice."
- Related Legislation.
- AB 2488 (Ting). Would authorize a local government to designate one or more downtown revitalization and economic recovery financing districts for the purpose of financing office-to-residential conversion projects with incremental tax revenues generated by office-to-residential conversion projects within the district.
- AB 2909 (Santiago). Would facilitate the adaptive reuse of qualified historic properties, starting January 1, 2026, and ending January 1, 2036, by incentivizing property owners of buildings that are at least 30 years old through tax benefits to engage in such preservation and reuse activities.
- Previous Legislation.
- AB 1490 (Lee), Chapter 764, Statutes of 2023, established a streamlined, ministerial approval process for “extremely affordable adaptive reuse projects.”
- AB 529 (Gabriel), Chapter 743, Statutes of 2023, required the Department of Housing and Community Development to convene a working group no later than December 31, 2024, to identify challenges to, and opportunities that help support, the creation and promotion of adaptive reuse residential projects, as specified, including identifying and recommending amendments to state building standards
- SB 423 (Wiener), Chapter 778, Statutes of 2023, amended SB 35 (Wiener), which created a streamlined, ministerial local approvals process for housing development proposals in jurisdictions that have failed to produce sufficient housing to meet their RHNA.
- SB 6 (Caballero), Chapter 659, Statutes of 2022, established the Middle Class Housing Act of 2022, allowing residential uses on commercially zoned property without requiring a rezoning.
- AB 1695 (Santiago), Chapter 639, Statutes of 2022, required any notice of funding availability issued by HCD for an affordable multi-family housing loan and grant program to state that adaptive reuse of a property for an affordable housing purpose is an eligible activity.
- AB 2011 (Wicks), Chapter 647, Statutes of 2021, created the Affordable Housing and High Road Jobs Act of 2022, which created a streamlined, ministerial local review and approvals process for certain affordable and mixed-use housing developments in commercial zoning districts and commercial corridors. A current bill, AB 2243 (Wicks) would amend AB 2011 to facilitate the conversion of office buildings to residential uses, among other provisions.
- SB 451 (Atkins), Chapter 703, Statutes of 2019, established a $50 million program to be administered by the Office of Historic Preservation (OHP) and the California Tax Credit Allocation Committee (CTCAC) for the purpose of facilitating the rehabilitation of historic buildings.
- Arguments in Support. YIMBY Action writes in support, “California is in the midst of a generational shift in work culture. Offices in places like downtown Los Angeles and the financial district in San Francisco are seeing the highest vacancy rates in 30 years. Companies are shifting to hybrid work models with fewer employees working full-time in the office. California also continues to suffer from a statewide housing shortage. We have set an ambitious goal of creating 2.5 million new homes by 2030. According to HCD, the state will need 180,000 new units of housing each year just to keep up with existing demand, including 80,000 units affordable to lower income households. Yet California averages less than 100,000 new units per year, and has never produced more than 20,000 new affordable homes in any year. California is grappling with the implications of climate change. To meet state climate goals, new housing must be in developed areas that do not require long commutes and rely on low-emissions modes of travel like transit, biking, and walking.
“AB 3068 removes barriers to converting existing office buildings into housing and allows more people to live closer to work centers and transit, without changing the physical character of our neighborhoods. It provides a by-right, ministerial approval pathway to allow existing commercial buildings to be converted for housing and mixed- use, while providing safeguards to help preserve historic properties. Lastly, AB 3068 also authorizes local governments to establish tax rebate programs to subsidize adaptive reuse housing conversion projects to allow them to be more economically feasible.”
- Arguments in Opposition. According to the City of Santa Clarita, “the bill’s provisions to require permits and entitlements to be conducted within 60 days if the project contains fewer than 150 housing units, and 90 days if the project is larger, jeopardizes the due diligence and responsibilities held by local governments to ensure projects are vetted to preserve public health, safety, and welfare. The City’s regular entitlement and permit review process spans 6-9 months. Furthermore, the City has the tools, knowledge, and policies in place to continue to plan and develop innovative residential units that enhance the quality of life for our community. It is critical for the City to maintain local land use and zoning authority and ensure that we continue to have the ability to consider unique factors when reviewing residential development.”
- Double-Referral. This bill was double referred to the Committee on Housing and Community Development where it passed out on a 9-0 vote on April 17th, 2024.
REGISTERED SUPPORT / OPPOSITION:
Support
California Preservation Foundation [Sponsor]
YIMBY Action [Sponsor]
Advance SF
Boma San Francisco
California Apartment Association
California Preservation Foundation
East Bay for Everyone
East Bay Yimby
Emerald Fund
Grow the Richmond
Housing Action Coalition
Lendlease
Livable Communities Initiative
Mountain View Yimby
Napa-Solano for Everyone
Northern Neighbors
Peninsula for Everyone
Plant Construction
Presidio Bay Ventures
Progress Noe Valley
Related California
San Francisco Chamber of Commerce
San Francisco Yimby
San Luis Obispo Yimby
Santa Cruz Yimby
Santa Rosa Yimby
South Bay Yimby
Southside Forward
Streets for People
Union Square Alliance
Urban Environmentalists
Ventura County Yimby
Webcor Builders
Opposition
City of Santa Clarita
Analysis Prepared by: Angela Mapp / L. GOV. / (916) 319-3958, Linda Rios / L. GOV. / (916) 319-3958
California Department of Housing and Community Development, A Home for Every Californian: 2022 Statewide Housing Plan. March 2022, https://storymaps.arcgis.com/stories/94729ab1648d43b1811c1698a748c136 ↑
U.S. Department of Housing and Urban Development, Point in Time Counts. https://www.huduser.gov/portal/datasets/ahar/2023-ahar-part-1-pit-estimates-of-homelessness-in-the-us.html ↑
David Garcia, Ian Carlton, Lacy Patterson, and Jacob Strawn, Making It Pencil: The Math Behind Housing Development (2023 Update), Terner Center for Housing Innovation, December 2023, https://ternercenter.berkeley.edu/research-and-policy/making-it-pencil-2023/ ↑
IBID. ↑
Mark Stivers, Affordable Housing Compares Favorably to Market-Rate Housing From a Cost Perspective, California Housing Partnership, January 2024: https://chpc.net/affordable-housing-compares-favorably-to-market-rate-housing-from-a-cost-perspective/#:~:text=It%20turns%20out%20that%20costs,market%2Drate%20developments%20do%20not. ↑
AB 2299 (Bloom), Chapter 735, Statutes of 2016 and SB 1069 (Wieckowski), Chapter 720, Statutes of 2016. ↑
SB 9 (Atkins), Chapter 162, Statutes of 2021. ↑
This includes many bills, including AB 72 (Santiago), Chapter 370, Statutes of 2017, AB 1397 (Low), Chapter 375, Statutes of 2017, SB 166 (Skinner), Chapter 367, Statutes of 2017, AB 686 (Santiago) Chapter 958, Statutes of 2018, AB 1771 (Bloom) Chapter 989, Statutes of 2018, and SB 828 (Wiener), Chapter 974, Statutes of 2018. ↑
AB 2162 (Chiu), Chapter 753, Statutes of 2018. ↑
SB 35 (Wiener), Chapter 366, Statutes of 2017, SB 423, Chapter 7778, Statutes of 2023. ↑
SB 330 (Skinner), Chapter 654, Statutes of 2019. ↑
AB 1515 (Daly), Chapter 378, Statutes of 2017, and SB 167 (Skinner), Chapter 368, Statutes of 2017. ↑
Date of Hearing: April 17, 2024
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Christopher M. Ward, Chair
ABPCA Bill Id:AB 3068 (
Author:Haney) – As Introduced Ver:February 16, 2024
SUBJECT: Adaptive reuse: streamlining: incentives
SUMMARY: Establishes the Office to Housing Conversion Act, creating streamlined, ministerial approvals process for adaptive reuse projects, as defined, and provides certain financial incentives for the adaptive reuse of existing buildings. Specifically, this bill:
- Defines the following terms related to the adaptive reuse investment incentive program:
- "Adaptive reuse investment incentive funds" means an amount up to or equal to the amount of ad valorem property tax revenue allocated to a participating local agency, excluding certain revenue transfers, from the taxation of an adaptive reuse project property that is in excess of the qualified adaptive reuse project property’s valuation at the time of the proponent’s initial request for funding;
- "Program" refers to a city or county-run incentive funding program for adaptive reuse, as established in this bill;
- "Proponent" is defined as the applicant for construction permits of adaptive reuse projects who will own or lease the property upon completion;
- Proponents receiving capital investment incentives through an adaptive reuse investment incentive fund may provide for the payment to the lessee of any portion of adaptive reuse investment incentive funds received; and
- Authorizes local governments to establish an adaptive reuse investment incentive program, as specified:
- Beginning in fiscal year 2024-25, the governing body of a city or county may establish an adaptive reuse investment incentive fund by ordinance or resolution.
- Cities or special districts can contribute an amount equal to their allocated property tax revenue from the increased value of the adaptive reuse project, but not the actual property tax allocation, through the adaptive reuse investment incentive program.
- Proponents of qualified adaptive projects can receive incentive funds, upon written request by the proponent and approval by the local government, for up to 15 years, starting the fiscal year after the project is issued a certificate of occupancy.
- Establishes the Office to Housing Conversion Act, which defines the following terms:
- “Adaptive reuse” means the retrofitting and repurposing of an existing building to create new residential or mixed uses including office conversion projects, provided that “adaptive reuse” shall not include the retrofitting and repurposing of any light industrial use, unless the planning director or equivalent position of a local government determines that the specific light industrial use is no longer useful for industrial purposes.
- “Adjacent portion of the project” means the portion of the project located on a site adjacent to the proposed repurposed existing building.
- “Broadly applicable housing affordability requirement” means a local ordinance or other regulation that requires a minimum percentage of affordable units and that applies to a variety of housing development types or entitlement pathways.
- “Impact fee” means any fee imposed pursuant to the Mitigation Fee Act.
- “Historical resource” means the same as defined in subdivision (j) of Section 5020.1 of the Public Resources Code, or a resource listed in the California Register of Historical Resources as described in Section 5024.1 of the Public Resources Code.
- “Light industrial use” means a use that is not subject to permitting by a district, as defined in Section 39025 of the Health and Safety Code.
- “Local government” means a city, including a charter city, a county, or a city and county.
- “Mixed use” means residential uses combined with at least one other land use, but not including any industrial use.
- “Office conversion project” means the conversion of a building used for office purposes or a vacant office building into residential dwelling units.
- “Persons and families of low or moderate income” means the same as defined in Section 50093 of the Health and Safety Code.
- “Phase I environmental assessment” means the same as defined in Section 78090 of the Health and Safety Code.
- “Phase II environmental assessment” means the same as defined in Section 25403 of the Health and Safety Code.
- “Preliminary endangerment assessment” means the same as defined in Section 78095 of the Health and Safety Code.
- “Residential uses” includes, but is not limited to, housing units, dormitories, boarding houses, and group housing. “Residential uses” does not include prisons or jails.
- “Use by right” means that the city’s or county’s review of the adaptive reuse project may not require a conditional use permit, planned unit development permit, or other discretionary city or county review or approval that would constitute a “project” for purposes CEQA. Any subdivision of the sites shall be subject to all laws, including, but not limited to, a city or county ordinance implementing the Subdivision Map Act.
- Authorizes local governments to adopt implementing ordinances for the Office to Housing Conversion Act, so long as the ordinances are consistent with, and do not inhibit the objectives of this bill.
- Establishes a streamlined, ministerial approval process for adaptive reuse projects using the Office to Housing Conversion Act, as follows:
- An adaptive reuse project shall be deemed a use by right in all zones, regardless of the zoning of the site, and subject to the streamlined, ministerial review process, except that the nonresidential uses of a proposed mixed-use adaptive reuse project shall be consistent with the land uses allowed by the zoning or a continuation of an existing zoning nonconforming use.
- The adaptive reuse project:
- Must comply with the following standards related to historic preservation and evaluation:
- Be proposed in an existing building that is less than 50 years old; or,
- Follow specific historic preservation protocols for projects proposed for an existing building that is listed on a local, state, or federal register of historic resources; or,
- Complete a preliminary application at the local level, as specified in (d), if the project is proposed for a building older than 50 years old. If the local government determines that the site contains a historic resource during this preliminary application, the project must follow the historic protocols specified in (ii).
- Must comply with any broadly applicable housing affordability requirement adopted by the local government. Notwithstanding any other law, a local government shall not impose or enforce any broadly applicable housing affordability requirement on the housing units of an adaptive reuse project that requires the project to restrict more than 10 percent of retrofitted or repurposed units as affordable.
- Must dedicate at least one-half of the square footage of the adaptive reuse project residential uses, unless the proposal is for the conversion of an office building, in which case the 50% residential threshold does not apply and the applicant must only build at least one residential unit.
- Shall not include for purposes of calculating the required residential square footage any underground space, including basements or underground parking garages.
- Shall not develop the adjacent parcel under the streamlined provisions of the Office to Housing Conversion Act if the project proponent elects to only build one residential unit in an office conversion, less than the 50% residential threshold, and the streamlined approval process only applies to the new housing created.
- Must complete a Phase I environmental assessment, and Phase II environmental assessment, if warranted, and complete any required mitigation or additional studies in response to those assessments, as specified.
- May include rooftop structures that exceed any applicable height limit imposed by the local government, as long as the rooftop structure does not exceed one story and is used for shared amenities.
- Allows adaptive reuse structures to include the development of new residential or mixed-use structures on undeveloped areas and parking areas on the parcels adjacent to the proposed adaptive reuse project site if all of the following requirements are met:
- The adjacent portion of the project complies with:
- Objective zoning, subdivision, and design review standards as they existed either when the development application was submitted or when a notice of intent was filed, whichever is earlier. Objective standards are defined as those that do not require subjective judgment and can be uniformly verified against external benchmarks, as specified in paragraph (5) of subdivision (a) of Government Code (GOV) Section 65913.4;
- The Affordable Housing and High Road Jobs Act of 2022; or,
- The Middle Class Housing Act of 2022.
- The adjacent portion of the project is on a legal parcel in an urbanized area or urban cluster, and at least 75% of the perimeter of the site is adjoined with urban uses.
- The adjacent portion of the project is not located in an environmentally sensitive zone, as defined in subparagraphs (B) to (K), inclusive, of paragraph (6) of subdivision (a) of Section 65913.4.
- The adjacent portion of the project complies with the tenant protection provisions outlined in paragraph (7) of subdivision (a) of Section 65913.4.
- The applicant and local agency comply with the preapplication requirements outlined in subdivision (b) of Section 65913.4.
- Any existing open space on the proposed project site is not a contributor to a historic resource.
- The adjacent portion of the project shall be eligible for a density bonus, incentives or concessions, waivers or reductions of development standards, and parking ratios pursuant to Density Bonus Law.
- The adjacent portion of the project complies with:
- Applies the following requirements to adaptive reuse projects proposed in buildings over 50 years old:
- Requires a developer to submit a notice of intent to the local government prior to applying for an adaptive reuse project involving a building over 50 years old and not listed on any historic registers. This notice is a preliminary application containing all required details as specified.
- Provides the local government with 90 days upon receiving the notice, to assess the site for historic significance.
- Requires the developer to commit via affidavit, if the building is listed on a historic register, or deemed a significant historic resource, to comply with the U.S. Secretary of the Interior’s Standards for Rehabilitation or secure relevant historic rehabilitation tax credits (federal or state).
- If the developer does not provide the affidavit for a project on a registered historic site, the local government may process the application under standard procedures of the Office to Housing Conversion Act, but the local government can deny or conditionally approve the project based on potential impacts to historic resources. Local agencies can impose conditions to lessen impacts on historic resources in line with the Secretary of the Interior’s Standards for Rehabilitation, but cannot impose other conditions of approval not related to the historic preservation component.
- Establishes that the review of an adaptive reuse project under these rules does not classify it as a "project” under CEQA.
- Allows adaptive reuse structures to include the development of new residential or mixed-use structures on undeveloped areas and parking areas on the parcels adjacent to the proposed adaptive reuse project site if all of the following requirements are met:
- Applies the following review processes to all adaptive reuse projects under the Office to Housing Conversion Act:
- Requires a local government to approve an adaptive reuse project meeting the objective planning standards specified in the regulations in a streamlined, ministerial process within a certain timeframe.
- Requires a local government to document the reasons for any conflicts with the objective planning standards, and provide this documentation to the development proponent within specified timeframes:
- 60 days for projects with less than or equal to 150 housing units, 90 days for projects with greater than 150 units.
- Deems a project to satisfy the objective planning standards if the local government fails to provide the required documentation within the specified timeframes.
- Considers a project consistent with objective planning standards if there is substantial evidence that would allow a reasonable person to conclude that the project is consistent with the objective planning standards. The local government cannot base its decision on the basis of materials not submitted with the application if the existing materials provide substantial evidence of compliance.
- Requires all relevant local government departments to comply with the following requirements and timelines when an application for streamlined, ministerial approval is submitted:
- Design reviews must be objective and focused only on assessing compliance with the criteria required for streamlined projects under the Act. Design review, and if all standards are met, approval, must be completed within 90 days for projects with less than or equal to 150 units, and 180 days for larger ones.
- That design review shall be objective and be strictly focused on assessing compliance with criteria required for streamlined projects. It shall not inhibit, chill, or preclude ministerial approval.
- Design reviews must be objective and focused only on assessing compliance with the criteria required for streamlined projects under the Act. Design review, and if all standards are met, approval, must be completed within 90 days for projects with less than or equal to 150 units, and 180 days for larger ones.
- Allows development proponents to request modifications to adaptive reuse projects approved before the final building permit is issued. Modifications must be consistent with the objective planning standards in effect when the original application was submitted, with some exceptions. The local government evaluates modifications for consistency using the objective criteria as the original project approval, and the review of modifications benefits from a streamlined, ministerial process. Local governments must make decisions on modifications within 60 days, or 90 days if design review is required.
- Establishes that project approvals remain valid for three years, extendable by a one-time, one year if substantial progress is demonstrated, unless the following conditions are met:
- If the project includes public investment in housing affordability beyond tax credits, or at least 20% of the units are affordable to households making at or below 80 percent of the area median income, then the project approvals shall not expire.
- If the qualified adaptive reuse project proponent requests a modification, then the time during which the approval shall remain valid shall be extended for the number of days between the submittal of a modification request and the date of its final approval, plus an additional 180 days to allow time to obtain a building permit. If litigation is filed relating to the modification request, the time shall be further extended during the litigation.
- Prohibits local governments from imposing automobile parking standards on the adjacent portion of the project if it meets specific conditions, such as proximity to public transit or location within historic districts. If the conditions specified in the Office to Housing Conversion Act are not met, parking requirements cannot exceed one space per unit.
- Requires local governments to issue subsequent permits (such as demolition, grading, and building permits) for approved adaptive reuse projects in the manner specified. The processing of these permits should occur without unreasonable delays and without imposing any additional requirements that are not typically required for other projects. The review and approval of subsequent permits must adhere to the objective standards that were applicable when the original project application was submitted, unless the project proponent agrees to updated standards.
- If a project involves public improvements like sidewalks, driveways, utility connections, etc., on local government land, the local government is required to approve these improvements without using discretionary powers. The local government must evaluate these public improvement applications based on the objective standards in effect at the time of the original project submission. The review should be conducted in the same manner as it would for any other project.
- Prohibits local governments from imposing special requirements solely because the project has streamlined or ministerial approval. They must also avoid unnecessary delays in reviewing and approving these public improvement applications.
- Prohibits a local government from imposing any requirements, such as increased fees inclusionary housing requirements, that do not apply to other housing developments that do not receive streamlined, ministerial approvals.
- Exempts adaptive reuse projects from all impact fees that are not directly related to the impacts resulting from the change of use of the site from nonresidential to residential or mixed use. Any fees charged shall be proportional to the difference in impacts caused by the change of use. This does not apply to any adjacent portion of the project.
- Requires proponents of adaptive reuse projects to sign a contract committing to pay designated fees within a specified timeframe. The obligation to pay fees benefits the local government imposing them and is enforceable by them, even if they are not a party to the contract.
- Gives Department of Housing and Community Development (HCD) enforcement authority over the Office to Housing Conversion Act.
EXISTING LAW:
- Establishes, pursuant to AB 1490 (Lee, Chapter 764, Statutes of 2023), a ministerial, streamlined approval process for the adaptive reuse of buildings into 100 percent affordable housing. (Government Code (GOV) Section 65913.12)
- Establishes, pursuant to SB 423 (Wiener, Chapter 778, Statutes of 2023), a streamlined, ministerial approval process, not subject to CEQA, for certain infill multifamily affordable housing projects that are compliant with local zoning and objective standards and that are proposed in local jurisdictions that have not met their regional housing needs allocation. (GOV 65913.4)
- Establishes, pursuant to AB 2011 (Wicks, Chapter 647, Statutes of 2022), a streamlined, ministerial approval process, not subject to CEQA, for certain infill multifamily affordable housing projects that are located on land that is zoned for retail, office, or parking. (GOV 65912.100-65912.140)
- Establishes, pursuant to SB 6 (Caballero Chapter 659, Statutes of 2022), the Middle Class Housing Act of 2022, allowing residential uses on commercially zoned property without requiring a rezoning. (GOV 65852.24)
- Authorizes the California Department of Housing and Community Development (HCD) to enforce state housing laws. (GOV 65585)
FISCAL EFFECT: Unknown.
COMMENTS:
Author’s Statement: According to the author, “COVID-19 permanently altered the way humans approach work. In the post pandemic era, many businesses realized that developments in technology allow them to move away from the 9 to 5, commuter model that kept downtown office buildings full of people during the work week. As the capital of technological innovation, California has been particularly impacted by this transition as more and more tech companies shift to offering remote work as a benefit to their employees.
A major downside to this transition is California’s emptying downtown business districts. Office vacancies across the state have hit record highs with Los Angeles and San Francisco both reaching over 30% vacancy rates. Many economists are theorizing that unless local and state governments act quickly, downtowns may be facing a doom-loop scenario with empty, devalued buildings leading to a severe decrease in local government tax bases, leading to decreased services and blight.
Converting vacant office buildings into new residential units will not only stop doom-loop scenarios, it will also revitalize and enliven business districts that often became ghost towns after 5pm. California also continues to suffer from a statewide housing shortage – to address this local governments must plan for the production of more than 2.5 million homes in the next several years.
Office to housing conversion is a win-win scenario that builds housing, preserves historic buildings, and creates new thriving communities in transit rich areas. California needs to get out of its own way and make office to housing conversions as easy as humanly possible. This bill does exactly that.”
Statewide Housing Needs: According to the Department of Housing and Community Development’s (HCD’s) 2022 Statewide Housing Plan Update,[1] California’s housing crisis is a half century in the making. After decades of underproduction, supply is far behind need and housing and rental costs are soaring. As a result, millions of Californians must make hard decisions about paying for housing at the expense of food, health care, child care, and transportation, directly impacting quality of life in the state. One in three households in the state doesn’t earn enough money to meet their basic needs. In 2023, over 181,000 Californians experienced homelessness on a given night, with a sharp increase in the number of people who became experienced homelessness for the first time.[2]
To meet this housing need, HCD determined that California must plan for more than 2.5 million new homes, and no less than one million of those homes must be affordable to lower-income households, in the 6th Regional Housing Needs Allocation (RHNA). This represents more than double the housing needed in the 5th RHNA cycle. As of April 5, 2024, in the 6th RHNA cycle, jurisdictions across the state have permitted the following:
- 2.1 percent of the very low-income RHNA
- 4.8 percent of the low-income RHNA
- 4.8 percent of the moderate-income RHNA
- 12.7 percent of the above moderate-income RHNA
Cost of building housing: It is expensive to build housing in California. The UC Berkeley Terner Center finds that challenging macroeconomic conditions, including inflation and high interest rates, affect the availability and cost of capital, resulting in rising costs for labor and materials.[3] Furthermore, workforce and supply shortages have exacerbated the already high price of construction in California, and economic uncertainty has made equity partners and lenders apprehensive about financing new housing development proposals.[4]
An analysis by the California Housing Partnership compares the cost of market rate development prototypes developed by the Terner Center with the median cost of developing affordable rental homes. In the four regions analyzed, the study found that the cost of developing one unit of affordable housing ranged from approximately $480,000 to $713,000, while the cost of developing one unit of market rate housing in the state ranged from approximately $508,000 to $637,000.[5]
Recent State Efforts to Address the Housing Crisis: In recent years, the state has taken a series of steps to address land use and regulatory constraints to new housing production. These include polices such as allowing accessory dwelling units by right,[6] reforming single family zoning,[7] and reforming the process local governments use to determine how much, where, and how to plan for housing. [8] The state has also enacted measures to expedite the approval of affordable housing. This includes measures to make supportive housing a by right use,[9] and make affordable and market-rate housing by right in jurisdictions where housing production is below identified targets.[10] This also includes measures to regulate and normalize the housing approval process,[11] and limit the ability of local governments to deny, delay, or diminish projects that otherwise meet all of local objective standards.[12] These recent efforts included the passage of AB 2011 (Wicks, Chapter 647, Statutes of 2022), also known as the Affordable Housing and High Road Jobs Act of 2022. AB 2011 went into effect on July 1, 2023. AB 2011 allows housing development in areas that are zoned for parking, retail, or office buildings, and provides eligible developments with a streamlined, ministerial approvals process.
Adaptive Reuse: Adaptive reuse is the process of converting an existing non-residential building to housing. The ability to adaptively reuse a building is highly dependent on the initially designed use. For example, uses such as warehouses and big box retail could not functionally be adaptively reused, because their tall ceilings, single stories, and rudimentary plumbing would need to be completely reconstituted to be appropriate for human habitation. Office buildings maintain some potential for conversion, because their multi-floor layout is conducive to housing; however, the large floor plate configuration of most office buildings makes it difficult to provide the necessary light and air that is required for residential units throughout 100% of the building’s square footage. For these conversions to occur, it would also need to be financially attractive to the property owner – something that has recently increased due to the sharp downturn in the downtown office market since the beginning of the COVID-19 pandemic.
According to an April 24, 2020 brief published by McKinsey and Company, the onset of COVID-19 has aggravated the existing challenges that the retail sector faces, including:
- A shift to online purchasing over brick-and-mortar sales;
- Customers seeking safe and healthy purchasing options;
- Increased emphasis on value for money when purchasing goods;
- Movement towards more flexible and versatile labor; and
- Reduced consumer loyalty in favor of less expensive brands.
The buildings most readily converted to housing are hotels and motels. These uses are already divided into quarters designed for short-term human habitation, and units can readily be converted to housing with the addition of kitchens. The viability of this conversion is visible in the success of Project Homekey, which has created over 15,000 units of housing to date, with a cost of approximately $306,000 per unit - substantially less than the current cost to build newly constructed housing.
A local example of successful adaptive reuse can be found in the City of Los Angeles' Adaptive Reuse Ordinance (ARO). ARO has been a significant policy tool in revitalizing underused buildings within the city's downtown area. Introduced in 1999, the Ordinance was specifically designed to facilitate the conversion of existing commercial buildings into residential or mixed-use properties. By easing certain local requirements, the ARO has enabled developers to transform vacant or underutilized office buildings, theaters, and other commercial structures into vibrant residential units, contributing to urban density and reducing the need to build on undeveloped land. Notably, the Ordinance has been quite successful in adding housing stock to the city; since its inception, the ARO has led to the creation of over 12,000 residential units in downtown Los Angeles by some estimates, significantly impacting the local housing market and revitalizing the historic core of the city.
This bill would make the adaptive reuse of existing buildings mixed-use projects an allowable use in cities and counties, even if such a use conflicted with any local plans, zoning ordinances, or other regulations. The bill would also allow for the new construction of mixed-use developments on vacant or underutilized parcels adjacent to an adaptive reuse project. Local governments would be required to approve an adaptive reuse project that met the bill's specifications in an expedited timeframe.
Adaptive Reuse Funding. In the past three years, the Legislature has taken multiple actions to support adaptive reuse. HCD’s Homekey program has allocated approximately $3.5 billion to convert hotels and motels to housing Californians at risk of, or experiencing, homelessness. Additionally, the 2022-2023 budget included $450 million one-time General Fund ($200 million in 2022-23 and $250 million in 2023-24) to convert existing commercial or office space to affordable housing. AB 1695 (Santiago, Chapter 639, Statutes of 2022) requires any notice of funding availability issued by HCD for an affordable multifamily housing loan and grant program to state that adaptive reuse of a property for an affordable housing purpose is an eligible activity. SB 451 (Atkins, Chapter 703, Statutes of 2019), established a $50 million program to be administered by the Office of Historic Preservation (OHP) and the California Tax Credit Allocation Committee (CTCAC) for the purpose of facilitating the rehabilitation, including adaptive reuse, of historic buildings.
To help offset the costs associated with adaptive reuse projects, this bill would provide financial incentives for adaptive reuse projects in the following ways:
- Authorizing local agencies to establish an Adaptive Reuse Investment Incentive Program, through which an amount up to or equal to 15 years’ worth of the amount of ad valorem property tax revenues could be transferred to the owners of qualifying adaptive reuse projects;
- Aligning program requirements so as to encourage the utilization of existing programs such as the Federal Historic Tax Credit, the newly adopted California Historic Tax Credit, the Mills Act, and the California Historical Building Code; and,
- Limiting a local governments’ ability to charge impact fees for adaptive reuse projects that are not directly related to the impacts resulting from the change of use of the site from nonresidential to residential.
Regarding the Adaptive Reuse Investment Incentive Program, this bill would allow for the transfer of property taxes collected by local agencies to market-rate developments with no affordability requirements. The California Constitution allows for the waiver of property taxes for a charitable purpose, as defined in statute. The Legislature defines a charitable purpose for purposes of a property tax welfare exemption, as a housing unit that restricted to 80% of the area median income (AMI) or less for 55-years. This bill would apply to property taxes collected by a local agency and therefore would not violate the welfare exemption. All local agencies wishing to establish an Adaptive Reuse Investment Incentive Program would need to “opt-in” to doing so through an authorizing local ordinance or resolution, to be approved by the governing body of a city or county. It is unclear why a local agency could not currently use their portion of property taxes currently to subsidize the housing developments envisioned under this bill.
Arguments in Support: According to YIMBY Action, one of the bill sponsors, California is in the midst of a generational shift in work culture. Offices in places like downtown Los Angeles and the financial district in San Francisco are seeing the highest vacancy rates in 30 years. Companies are shifting to hybrid work models with fewer employees working full-time in the office. California also continues to suffer from a statewide housing shortage. We have set an ambitious goal of creating 2.5 million new homes by 2030.
While there is desire to repurpose vacant and underutilized existing commercial buildings for residential and mixed uses, there are many challenges to doing so. Converting existing buildings to housing is sometimes lauded as more cost-effective than a new construction, but renovating an existing office building in California to allow housing is often more expensive than a complete tear-down redevelopment.
AB 3068 would create the Office to Housing Conversion Act (the Act). The Act addresses barriers to converting existing commercial buildings to housing and mixed uses, allowing more people to live closer to work centers and transit, without changing the physical character of existing neighborhoods, and helps to preserve historic buildings.”
Arguments in Opposition: According to the City of Santa Clarita, “the bill’s provisions to require permits and entitlements to be conducted within 60 days if the project contains fewer than 150 housing units, and 90 days if the project is larger, jeopardizes the due diligence and responsibilities held by local governments to ensure projects are vetted to preserve public health, safety, and welfare. The City’s regular entitlement and permit review process spans 6-9 months. Furthermore, the City has the tools, knowledge, and policies in place to continue to plan and develop innovative residential units that enhance the quality of life for our community. It is critical for the City to maintain local land use and zoning authority and ensure that we continue to have the ability to consider unique factors when reviewing residential development.”
Committee Amendments: Staff recommends the following amendments be made to AB 3068 to prioritize residential square footage, promote housing development in infill locations, increase the affordability requirements, and add in labor requirements, as follows:
- Provide that the Adaptive Reuse Investment Incentive Program shall only be used to offset the cost of the affordable housing units associated with adaptive reuse projects.
- Restricts the utilization of the Office to Housing Conversion Act to urbanized areas and urban clusters, and on parcels where at least 75% of the perimeter of the site adjoins parcels developed with urban uses.
- Incorporate the following affordability requirements for all development under AB 3068, which must be met unless the local government has a higher local affordability requirement, in which case the local standard shall apply:
- For rental housing:
- Either 8% of the units affordable for very low-income households, and 5% of the units for extremely low-income households; or 15% of the units for lower-income households.
- For owner-occupied housing:
- Either 30% of the units affordable for moderate-income households; or 15% of the units for lower-income households.
- Require a minimum of 50% residential square footage for all qualifying adaptive reuse projects.
- Requires the addition of Labor Standards included in a previous streamlining bill, AB 2011 (Wicks), for all developments subject to the Office to Housing Conversion Act.
Related Legislation:
AB 2488 (Ting). Would authorize a local government to designate one or more downtown revitalization and economic recovery financing districts for the purpose of financing office-to-residential conversion projects with incremental tax revenues generated by office-to-residential conversion projects within the district.
AB 2909 (Santiago). Would facilitate the adaptive reuse of qualified historic properties, starting January 1, 2026, and ending January 1, 2036, by incentivizing property owners of buildings that are at least 30 years old through tax benefits to engage in such preservation and reuse activities.
AB 1490 (Lee), Chapter 764, Statutes of 2023. Established a streamlined, ministerial approval process for “extremely affordable adaptive reuse projects.”
AB 529 (Gabriel), Chapter 743, Statutes of 2023. Required the Department of Housing and Community Development to convene a working group no later than December 31, 2024, to identify challenges to, and opportunities that help support, the creation and promotion of adaptive reuse residential projects, as specified, including identifying and recommending amendments to state building standards
SB 423 (Wiener), Chapter 778, Statutes of 2023. Amended SB 35 (Wiener), which created a streamlined, ministerial local approvals process for housing development proposals in jurisdictions that have failed to produce sufficient housing to meet their RHNA.
SB 6 (Caballero), Chapter 659, Statutes of 2022. Established the Middle Class Housing Act of 2022, allowing residential uses on commercially zoned property without requiring a rezoning.
AB 1695 (Santiago), Chapter 639, Statutes of 2022. Requires any notice of funding availability issued by HCD for an affordable multi-family housing loan and grant program to state that adaptive reuse of a property for an affordable housing purpose is an eligible activity.
AB 2011 (Wicks), Chapter 647, Statutes of 2021: Created the Affordable Housing and High Road Jobs Act of 2022, creating a streamlined, ministerial local review and approvals process for certain affordable and mixed-use housing developments in commercial zoning districts and commercial corridors. A current bill, AB 2243 (Wicks) would amend AB 2011 to facilitate the conversion of office buildings to residential uses, among other provisions.
SB 451 (Atkins), Chapter 703, Statutes of 2019. Established a $50 million program to be administered by the Office of Historic Preservation (OHP) and the California Tax Credit Allocation Committee (CTCAC) for the purpose of facilitating the rehabilitation of historic buildings.
Double referred: This bill was also referred to the Assembly Committee on Local Government, where it will be heard should it pass out of this committee.
REGISTERED SUPPORT / OPPOSITION:
Support
YIMBY Action (Sponsor)
California Preservation Foundation (Co-Sponsor)
Abundant Housing LA
Advance SF
Aids Healthcare Foundation
Bay Area Council
BOMA San Francisco
California Apartment Association
California Community Builders
California YIMBY
CivicWell
East Bay YIMBY
Emerald Fund
Fieldstead and Company
Grow the Richmond
Housing Action Coalition
Housing Trust Silicon Valley
Lendlease
Livable Communities Initiative
Mountain View YIMBY
Napa-Solano for Everyone
Northern Neighbors
Peninsula for Everyone
Plant Construction
Presidio Bay Ventures
Progress Noe Valley
Related California
San Francisco Chamber of Commerce
San Francisco YIMBY
San Luis Obispo YIMBY
Santa Cruz YIMBY
Santa Rosa YIMBY
South Bay YIMBY
Southside Forward
SPUR
Streets for People
Union Square Alliance
Urban Environmentalists
Ventura County Yimby
Webcor Builders
Opposition
City of Santa Clarita
Analysis Prepared by: Dori Ganetsos / H. & C.D. / (916) 319-2085
California Department of Housing and Community Development, A Home for Every Californian: 2022 Statewide Housing Plan. March 2022, https://storymaps.arcgis.com/stories/94729ab1648d43b1811c1698a748c136 ↑
U.S. Department of Housing and Urban Development, Point in Time Counts. https://www.huduser.gov/portal/datasets/ahar/2023-ahar-part-1-pit-estimates-of-homelessness-in-the-us.html ↑
David Garcia, Ian Carlton, Lacy Patterson, and Jacob Strawn, Making It Pencil: The Math Behind Housing Development (2023 Update), Terner Center for Housing Innovation, December 2023, https://ternercenter.berkeley.edu/research-and-policy/making-it-pencil-2023/ ↑
IBID. ↑
Mark Stivers, Affordable Housing Compares Favorably to Market-Rate Housing From a Cost Perspective, California Housing Partnership, January 2024: https://chpc.net/affordable-housing-compares-favorably-to-market-rate-housing-from-a-cost-perspective/#:~:text=It%20turns%20out%20that%20costs,market%2Drate%20developments%20do%20not. ↑
AB 2299 (Bloom), Chapter 735, Statutes of 2016 and SB 1069 (Wieckowski), Chapter 720, Statutes of 2016. ↑
SB 9 (Atkins), Chapter 162, Statutes of 2021. ↑
This includes many bills, including AB 72 (Santiago), Chapter 370, Statutes of 2017, AB 1397 (Low), Chapter 375, Statutes of 2017, SB 166 (Skinner), Chapter 367, Statutes of 2017, AB 686 (Santiago) Chapter 958, Statutes of 2018, AB 1771 (Bloom) Chapter 989, Statutes of 2018, and SB 828 (Wiener), Chapter 974, Statutes of 2018. ↑
AB 2162 (Chiu), Chapter 753, Statutes of 2018. ↑
SB 35 (Wiener), Chapter 366, Statutes of 2017, SB 423, Chapter 7778, Statutes of 2023. ↑
SB 330 (Skinner), Chapter 654, Statutes of 2019. ↑
AB 1515 (Daly), Chapter 378, Statutes of 2017, and SB 167 (Skinner), Chapter 368, Statutes of 2017. ↑
Discussed in Hearing
Assembly Floor
Senate Floor
Senate Standing Committee on Local Government
Senate Standing Committee on Housing
Senate Standing Committee on Local Government
Assembly Floor
Assembly Standing Committee on Appropriations
Assembly Standing Committee on Local Government
Bill Author
Bill Co-Author(s):