Our annual rundown of the state housing bills that will shape what gets built in California
Every fall, our very own Sibley Simon walks the Workbench team through the housing bills that came out of the legislative session: what passed, what fell short, and what it all means for the homes we design and build. It has become one of our favorite internal traditions, and this year we thought you might find it useful too.
Below is a summary of our read on the bills we expect to matter most, organized by what they do. It is not legal advice, and many of these laws will take shape only as the state issues guidance and local jurisdictions implement them. But it is a fair snapshot of where things stand, and where we think the opportunities are. For a full breakdown of all the bills, head over to our blog page HERE. Happy reading, fellow housers in arms.
Building Up Where It Makes Sense
AB 2074: Downtown Transit Hub Districts
Seven of California’s largest cities will be required to establish downtown transit hub districts, areas where the state law establishes a height that cities must at least allow.
Height limits can be no lower than 150 feet anywhere in the district.
On 25% of the district, height limits can be no lower than 450 feet.
Certain state zoning standards apply, with a streamlining option available when labor standards are met.
The Legislature is working toward a state loan program to help these districts actually get built.
Why it matters: Zoning for height in key downtown and transit-hub areas is incredibly important for meeting our housing need. Even when allowed, financing taller buildings is the other challenge. Pairing this mandate with a loan program is a recognition that capacity on paper does not automatically become homes.
AB 2433: Density Bonus Enhancements
State Density Bonus Law is one of the most-used tools in our kit, and this bill makes it stronger and clearer in several ways:
Two additional concessions for for-sale projects.
Clarifies that the density bonus itself does not trigger environmental review, and that waivers and concessions are not discretionary. This was what has always been intended by the legislature, but a few jurisdictions were trying to delay or stop projects by claiming this.
A second density bonus for student housing within half a mile of a public college or university.
Developers may run a base-density study and then take the bonus as a percentage increase in floor area ratio (FAR). This will reduce risk around calculating density bonus within many mixed-use corridors and downtowns.
The second density bonus can now apply to majority-lower-income affordable projects.
Moderate-income units required for the second bonus can be satisfied with lower-income restrictions, the same “layering” already allowed for required lower-income units.
Why it matters: Every clarification that takes confusion and discretion off the table is one less argument at a public hearing and one less source of delay. The FAR option in particular gives designers more flexibility to fit a project to its site.
More Certainty on Cost and Timeline
SB 104: Infrastructure Cost Certainty
Few things sink a project faster than a surprise list of required street, utility, and frontage improvements that show up late in the process. SB 104 creates a two-stage system to get that information earlier and lock it in.
Stage 1: Pre-application / application (not legally binding)
A developer may request a “preliminary estimate of required improvements,” and the city or county must respond within 30 business days.
The response must include a good-faith list of improvements and a current cost estimate, both onsite and offsite. It covers the local jurisdiction’s own infrastructure only, not PG&E or CEQA items.
The same request can be made of other agencies and special districts within 30 days of submittal, and they owe a list back within 30 days.
Stage 2: Building permit (legally binding)
The jurisdiction must issue a list of required infrastructure improvements within 30 business days, and no new items can be added beyond that list.
Exceptions: a finding that an item is needed to mitigate a specific, adverse health or safety impact, or that it is needed because of a change the developer itself is making.
Why it matters: Housing finance runs on predictable numbers. Knowing the infrastructure bill up front, and knowing it will not grow, makes projects easier to underwrite and harder to stall.
AB 2044: Pricing Out Building Code Changes
Proposed changes to the state building code must now include cost estimates. Code changes are often made with good intentions, but their cumulative cost lands on renters and buyers. Sometimes these result in high costs and very little safety benefit, if any. This puts that tradeoff in front of decisionmakers before the rule is adopted, not after.
SB 963: Time Limits on Coastal Commission Appeals
SB 963 sets outside time limits on the Coastal Commission appeals process. It is a meaningful step for coastal communities like ours, though a case can still take close to a year if substantive concerns are raised.
SB 677: Limiting Appeals, Enforcing Deadlines
Appeals: Limits third-party appeals of subdivision maps for urban infill projects, closing off a common source of delay.
Enforcement: Allows the state to override a local jurisdiction that is delaying an affordable project by failing to hold a required bond hearing.
Why it matters: We have seen firsthand how procedural steps can be used to slow projects that meet every rule. Giving the state a way to step in when deadlines are ignored helps keep the process honest.
Small Lots, ADUs, and Missing Middle
SB 1116: Small-Lot Subdivision & Senior Housing
California’s small-lot subdivision law lets owners split lots to create more homeownership opportunities on land that is already served by infrastructure. SB 1116 closes several gaps that jurisdictions and private agreements have used to blunt it:
Prevents HOAs and deed restrictions from blocking use of the law.
Requires cities to report on whether and how the law is being used.
Makes numerous smaller fixes that close off ways jurisdictions could obstruct these developments.
Allows parcel map approval and entitlements to proceed at the same time, rather than one after the other.
Separately, adds assisted living and other senior care facilities to the next cycle’s RHNA goal counts.
AB 956: Two Detached ADUs by Right
Local jurisdictions must now allow two detached ADUs by right on any single-family lot. The bill does not require jurisdictions to also allow a JADU alongside those two detached units, so this effectively upgrades what a 3rd unit can be relative to previous law. For homeowners, this is a real expansion in the flexibility of what is possible in the backyard.
SB 117: ADU Impact Fee Relief
ADUs over 750 square feet now pay impact fees only on the square footage above 750 sf.
This applies to the first two ADUs on a property. We read this to include the first two multifamily-conversion ADUs as well, though we are still confirming that interpretation.
Full impact fees apply beyond the first two ADUs.
Notably, not a single legislator voted “no” at any step in the process, a good reminder that ADUs remain one of the truly popular housing wins.
Student Housing
Three separate bills passed this session addressing student housing. Combined with density bonus, student housing no longer has to be master leased to a college or university, which opens the door for more independent projects near campuses. In a college town like Santa Cruz, that may really help.
Making Modular Easier
Factory-built housing can cut construction time and cost, but it has been held back by rules written for site-built homes. This package addresses several of those barriers:
AB 1815: Local reach codes no longer apply to factory-built modular housing.
AB 2058: Strengthens HCD’s ability to perform factory inspections and caps modular inspection fees.
AB 2012: Eases trucking permits for modular units: annual permits only, no special local requirements, 8 inches of extra width, and fewer pilot vehicles.
AB 2185: Removes barriers in affordable housing funding programs that made modular construction harder to use.
Funding: New Money, and a Catch
AB 179: Budget Dollars With Strings Attached
AB 179 directs significant money into affordable housing programs:
$500 million for state tax credits
$200 million for the Multifamily Housing Program
$100 million for a disaster relief fund
But it pairs that funding with an impact-fee waiver incentive that may prove counterproductive. Starting next spring, projects without fee waivers will be less competitive for state funding. Because waivers are granted by cities, not developers, this effectively hands jurisdictions that are reluctant to see affordable housing another way to keep it out, and penalizes projects for decisions they do not control.
Proposition 1: Affordable Housing Bond (Election Day is Tuesday, November 3)
Prop 1 is an $11.25 billion general obligation bond for housing affordability:
$10 billion for affordable rental housing and homeownership programs, including:
$450 million for farmworker housing: loans and grants to build or renovate rental and owner-occupied homes
$350 million for higher-education student housing, split evenly between UC and CSU
$200 million for tribal housing grants for construction and repair
$200 million for local pilot programs available to cities, counties, and other qualifying entities
$1.25 billion for a home purchase loan program for veterans
What We’re Watching Next Year
Not everything made it across the finish line. This is a bill we will be following closely in the next session:
AB 1903: Condo Liability Reform.
Passed both chambers of the legislature but did not reach a concurrence vote before the session ended. This seems to happen with one key bill every few years. Construction defect liability is a major reason so few condos get built in California, and we have heard that the legislature will be making another attempt to address that next year.
Playing Defense
Some of the most important work in any session is stopping bills that would move us backward. This year, we helped:
Stop several anti-SB 79 bills and other NIMBY-driven measures that would have rolled back recent progress on transit-oriented housing.
Limit the scope of the Altadena carve-out from the small-lot subdivision law.
The Bottom Line
Taken together, this session continued the steady progress we have seen over the last decade: more housing allowed by right, fewer opportunities for delay, and more certainty about cost and timeline. None of these build homes on their own. That still takes good projects and patient capital. But it makes the path a little clearer for everyone working to build the housing California needs.
As always, if you have questions about how any of these bills might affect a project or property you are working on, we would love to hear from you.
— The Workbench Team