California found a way to ignore NIMBYs and build more housing

• California may have found an effective model to build affordable housing more quickly.
• SB 35 — a law passed in 2017 and set to expire in 2026 — streamlines the approval process.

California may have found an effective model to spur the construction of much-needed affordable housing by bypassing local opposition.

Senate Bill 35, a law passed in 2017 and set to sunset in 2026, requires local governments to fast-track the construction of multi-unit buildings in pre-existing neighborhoods, also known as infill construction. The law applies to all regions of California that haven't met their housing construction targets, which is almost everywhere in the housing-scarce state.

A new study from the Terner Center for Housing Innovation at UC Berkeley found that the law has made the construction of largely affordable multi-unit buildings "faster and more certain and has become a default approach for many affordable housing developers."

Between 2018 and 2021, 156 projects with more than 18,000 units have been approved or are under review under SB 35. And the majority of these units — 62% — are reserved for residents who make less than 80% of the area's median income. Most of the SB 35 construction has happened in the Bay Area and Los Angeles County, but the law is increasingly being employed across the state.

While 18,000 new mostly affordable homes is an achievement, it accounts for jut 10% of the 180,000 new homes California is estimated to need to build each year to keep up with demand and make up for its housing shortage. The state is currently building about half that number annually.

A key element of the policy is that it minimizes the role that local governments and the public play in approving new housing construction. The law prohibits local communities from stopping the construction of code- and zoning-compliant multi-family homes.

These local review processes can extend project construction times and increase the costs of a project so much that it's not financially feasible for the developer to move forward with the project. Input from existing local communities is often dominated by older homeowners, who aren't representative of the broader community, making it an often unfair process that sinks much-needed development.

That said, the report found that many affordable housing developers still seek community input and sometimes accommodate the public's design requests for SB 35 projects.

The local government approval process is time-limited to 90 days for projects with 150 housing units or fewer and 180 days for bigger developments. SB 35 projects are also exempt from review under the California Environmental Quality Act, further speeding up the approval process.

Caleb Roope, CEO of the Pacific Companies, which develops affordable housing, told the Terner Center researchers that the law speeds up the government approval process by about a year.

But the law sunsets in 2026. State Senator Scott Wiener, who authored SB 35, has introduced a new bill — SB 423 — to extend and amend the policy to encourage more mixed-income developments and offer more benefits to construction workers, among other changes.

The Terner Center report recommends some updates to the law, including better data collection and tweaks to encourage more mixed-income developments. Affordable housing developers said they need the law to be extended to continue building with any speed.

"It'll be catastrophic if it's not extended," Ramie Dare, director of real estate at the non-profit affordable housing developer Mercy Housing California, told the researchers. "Thinking about going back to the process of going one year or sometimes 18 months for approvals, and how hard that is on everybody, and the staff load required to actually manage all of that — I just don't think that exists."