Navigating the Challenges Posed by SB 35

Since its passage in 2017, Senate Bill 35 (SB 35)—a state law requiring local jurisdictions to streamline approval of certain affordable housing projects—has been controversial, to say the least. Over the last few years, SB 35 has been the subject of much litigation, as discussed in Benjamin Gonzalez’s and Andrew Schwartz’s article, “Is local control of affordable housing development dead?” in this issue. But because none of these cases has yet reached the appellate courts, and because the language of SB 35 itself is often less than clear, local governments face unanswered questions when determining how to apply this law. The Department of Housing and Community Development’s (HCD) Streamlined Ministerial Approval Process Guidelines (SB 35 Guidelines) clarify certain provisions of SB 35, as do the Legislature’s minor “clean-up” amendments to the statute. However, other provisions in the law remain unclear.

While several high-profile SB 35 approvals and denials have been challenged, other SB 35 projects have moved forward. A number of these projects provide 100% affordable housing, while others are mixed income. Both market-rate housing developers and affordable housing developers have taken advantage of SB 35’s streamlining provisions, building projects including the Berkeley Way project in Berkeley, the Alum Rock Family Housing project in San Jose, PATH Villas Hollywood in Los Angeles, and the Starcity Minna project in San Francisco. 

This article discusses the challenges posed by SB 35’s ministerial process. It then explains some of the areas where the law remains challenging to interpret and some of HCD’s proposed updates to the SB 35 Guidelines, and provides tips for jurisdictions navigating these areas.

The Ministerial Process and Its Challenges

SB 35 adds mandatory streamlining requirements for cities and counties where housing development is not keeping up with local housing need, as determined by HCD. Depending on how far behind the housing need a city or county falls and where the city or county is located, projects with as little as 10% low income or 20% moderate income housing can qualify for the law’s streamlining provisions. However, in most jurisdictions, projects must dedicate at least 50% of the units to housing affordable to households making at or below 80% of the area median income.

In addition to meeting the affordability criterion, a housing development project must meet a number of other statutory criteria to qualify for SB 35 streamlining. But, if a qualifying project meets the statutory criteria, a jurisdiction must approve it ministerially, a process that differs significantly from most other land use decisions made by local governments.

SB 35 projects are exempt from the California Environmental Quality Act (CEQA), and thus environmental review and mitigation do not apply to these projects. However, the statutory criteria these projects must meet should disqualify projects with certain potentially significant impacts. For example, if a project is on a hazardous waste site on the state’s Cortese list or within a very high fire hazard severity zone, then it will not qualify for streamlined ministerial review. Nevertheless, SB 35 can hamper a local government’s ability to require mitigation on some sites where projects could still have environmental impacts.  

The ministerial approval process contemplated by SB 35 limits what local jurisdictions can consider when approving or denying a project. In particular, jurisdictions can only apply “objective” planning standards to SB 35 projects, and they must make decisions about consistency with these standards very quickly. If a city or county determines that a proposed project conflicts with any objective standard, it must provide documentation of the standard with which the development conflicts, and it must explain why the development conflicts with that standard within either 60 or 90 days of the application’s submittal, depending on how many units are in the proposed development.  

Tip: A jurisdiction can expedite this process by identifying the objective standards in its General Plan, zoning code, and other planning documents. HCD has directed local governments to create just such a list.

Another complicating factor is that SB 35 does not specify who makes the ultimate ministerial decision to approve or deny a project. Some jurisdictions have directed their city managers or planning directors to determine if a project meets the law’s standards and to issue final approvals, while others leave the ultimate decision to their planning commission or city council. Under the law as written, no particular person or body is designated to make this decision.

Additional Challenges

Other challenges to implementing and applying SB 35 remain. For instance, mixed use projects may qualify for SB 35, but must dedicate at least two-thirds of their square footage to residential uses. While this may seem straightforward, application in practice is challenging. It remains unclear how shared spaces should be divided between residential and nonresidential uses. The SB 35 Guidelines provide only that structures utilized by both residential and nonresidential uses must be credited proportionally to intended use. They offer no guidance about who should determine intended uses or how this calculation should be made.

Another challenge facing jurisdictions processing SB 35 applications occurs when the objective standards they must apply, including zoning, General Plan, subdivision, or design review standards, are mutually inconsistent. When this happens, a development is deemed consistent with the objective standards if it is consistent with the standards set forth in the General Plan.

Tip: Cities and counties should review their zoning and General Plan standards to determine if any conflicts exist, and should update any conflicting provisions. Cities and counties may also consider including more objective standards in their General Plans.

Finally, jurisdictions face the hurdle of imposing appropriate conditions of approval when issuing SB 35 approvals. While jurisdictions may impose “standard conditions of approval,” these conditions must be objective and broadly applicable to development within the locality.

Tip: Jurisdictions should consider creating lists of their standard conditions of approval and then adding any objective standards needed. For example, if a jurisdiction wished to require drought tolerant landscaping as a standard condition, it could list specific drought tolerant species that applicants could use in project landscaping.

Potential Changes to the SB 35 Guidelines

HCD recently closed its second public comment period on an update to its SB 35 Guidelines. These SB 35 Guidelines are quasi-legislative regulations and have the same weight as statutes, so local agencies must comply with them. While HCD has not yet issued the final updated Guidelines, two proposed changes are especially important to monitor:

·      If SB 35 projects are within a half mile of public transit, they do not need to provide any parking. The SB 35 Guidelines currently define “public transit” as a “major transit stop.” However, in the draft update, HCD defines “public transit” much more broadly to mean a location with any bus, train, or subway that charges a set fare and is available to the public. This new definition would dramatically expand the areas that would qualify to provide no parking.

·     The draft updated SB 35 Guidelines significantly change the processing timelines for SB 35 projects. Under the draft update, if a locality does not conduct some sort of design review or public oversight, the locality must issue its final approval within 60 or 90 days.

Localities should carefully review the final version of HCD’s updated SB 35 Guidelines and consider what changes to their procedures or standards they could make.

For more information about the latest updates to the California Department of Housing and Community Development’s SB 35 Guidelines, contact Caitlin Brown.

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