New California Legislation Impacting Commercial Real Estate in 2023

With the turn of the year comes ill-fated resolutions, needed but annoying rain, and a slew of new legislative enactments coming into effect. While commercial real estate is not typically a hotbed for legislative activity, there are a few noteworthy changes that may affect prospective projects, mostly focused on relaxing procedural requirements to incentivize the construction of new housing projects to combat the state’s ongoing housing crisis.

AB 2097

AB 2907 prohibits a public agency from imposing a minimum parking requirement on any development project that is located within one-half mile of a major transit stop, including commercial projects which are not for housing purposes. Exceptions apply for certain circumstances where the local jurisdiction concludes the lack of adequate parking will have a substantial, negative impact on the community, but the standards for these exceptions have been heightened.

AB 2011/SB 6

Referred to as the “Affordable Housing and High Road Jobs Act of 2022”, AB 2011 streamlines the development process for multifamily housing developments with a zoning designation permitting office, retail or parking use. In order to qualify for this ministerial approval process for which CEQA review is not required, the project must pay prevailing wages to construction workers and satisfy certain affordable housing standards.

Similar to AB 2011, SB 6 (referred to as the “Middle Class Housing Act of 2022”) allows residential development on property zoned for retail or office use. While there is no streamlined approval process like AB 2011, SB 6 does not apply affordable housing standards for qualification. SB 6 also requires prevailing wages and utilizing a “skilled and trained workforce.”

These two laws take effect July 1, 2023.

SB 561/AB 2233/AB 2592

Codifying Governor Newsom’s 2019 order, SB 561 and AB 2233 require surplus state land to be used for affordable housing development. Timelines have been put in place to create a list of such development opportunities. Similarly, AB 2592 requires identification of state-owned buildings for conversion to housing. These could present opportunities for developers looking for new housing projects.

Lightning round:

  • AB 2234: New enforceable timelines for issuance of governmental approvals have been implemented for post entitlement housing permits, such as building, demolition and grading permits.
  • AB 2295: Special exemptions from local zoning and use restrictions now apply for rental housing developments on land owned by an educational agency (teacher housing law).
  • SB 886: New exemptions from CEQA apply to university housing projects, subject to an extensive list of qualifying requirements.
  • AB 2334/AB 1551/AB 682: New density standards have been applied to the qualification requirements for affordable housing projects.
  • AB 2221/SB 897/AB 916: Various changes have been made to ease the development of ADUs, such as increased height limits and bedroom counts.
  • AB 2245: Expanded procedures have been put in place for partition actions, expanding the option right previously applicable to “heirs property” only.
  • AB 2745: New limitations enacted for broker applicants, specifying that the 2-year experience requirement must be satisfied within the 5-year period prior to the application date.

SB 3 (from 2016): Minimum Wage increased to $15.50 per hour.