Let's talk about the current reforms that the State of California is doing to fix the housing crisis.

As I've written before, California local governments have proven that they're totally incapable of fixing the housing crisis on their own. It's a pretty toxic stew, because every single one of the 88 petty kingdoms of Los Angeles County, and 101 cities of the Bay Area wants more housing to be built - but nobody wants anything new to be built near them.

Because of that, most of the action on housing reform has shifted to Sacramento, where the State has determined to take direct control of local zoning.

We're mostly done with this year's legislative cycle in Sacramento, and recall or no recall, the Newsom Administration supports all of these reforms. So, let's talk about the good, the bad and the ugly of this legislative cycle.

The good

The state is finally bringing the hammer down on shitty local governments. In the last couple months, the State has threatened to void the zoning of Santa Monica, San Diego, Beverly Hills, and a half-dozen other cities across Southern California which refuse to zone for enough housing. (Newsom's people have been real good on this, after decades of state inaction.)

Abolition of suburban-style zoning. In over 3/4 of LA, the only thing that's legal to build is a suburban-style home. The reform bill changes it so you can build a duplex there instead. Critically, this also changes the setback rules, which means that you can build up to 4' of the property line in all single-family residential areas. This is good because there so many houses all over greater LA which are shitty, old, and expensive. In the past, decrepit old houses built in the 1950s would most likely get flipped or replaced with McMansions; in the future, you're much more likely to see them replaced with full-sized duplexes. That said, you're going to need further reform to make this have a lot of effect, because city building size laws still apply. In WeHo, for example, the maximum building size for a standard lot is 3750 square feet for a 7500 square foot lot. This means it might not be economical to tear down an old worn-out suburban home and replace it with a duplex.

Sell off your yard. The average LA lot is 150' x 50', which is three times the size of the average lot in San Francisco. Another reform from Bill SB9 allows homeowners to sell off half their lot and build a duplex on it. (I don't think this is a very big reform, because very few homeowners actually know anything about real estate development or want to play landlord; you'd have to pre-approve designs like you do with ADUs to really make it stick.)

Streamlined rezoning for small apartment buildings. Currently, any rezoning requires environmental review under the California Environmental Quality Act. This process sucks, it costs north of $100k each time you do it, and local gadflies with too much time on their hands are absolutely willing to bog down rezoning with baseless lawsuits. This reform, SB10, means that city councils can allow dingbats, row houses, and other types of traditional housing by simple majority vote.

Reforms to the building size law. A pretty pervasive problem is that many cities have pretty draconian building size laws, so it's technically legal to build apartments but in practice it'll never work. For instance, on a typical 5000-square-foot El Segundo lot which is zoned for apartments, you can legally build 3 apartments. The problem is, El Segundo's building size law makes that impossible to build. You see, the maximum building size for a 5000 square foot lot in El Segundo is 5300 square feet, including the garage. This just doesn't fly, and I'll show you why by doing a little math. El Segundo requires 7 parking spaces (2 per unit + 1 guest space) and each space takes up about 400 square feet, including driveway and space to pull out.

400 sq. ft. x 7 spaces = 2800 sq. ft.

This leaves you 2500 square feet to build three units - that is, three two-bedroom apartments with 833 square feet each. No way that makes financial sense. But with the new reform overriding the local law, you get 5000 square feet for three units, not counting the garage. This means you can build three full-sized, 1750 sq. ft. houses, and it's much easier to make the economics work. (The bill is SB478.)

More townhouses. There are lots of differences between condos and townhouses, but one big one is that condos have to be built to higher safety standards because of the building code. They also have HOAs, which are a gigantic pain to deal with and expensive. In the old days, this isn't how they did things. Back in the day, they'd cut up large lots into smaller ones, and sell a bunch of small single-family homes. (This is how you got the Victorians of San Francisco.) LA City already allows this; AB803 makes this practice legal statewide.

Honest fees for new homes. Since Prop. 13 destroyed the property tax base in 1978, local governments have been starved for cash. Many of them have tried to fill the shortfall with sales tax revenue. Another tack that many cities took was to jack up the fees charged to developers. In theory, these fees are meant to offset the cost of additional public services. But in practice they get used as a cash cow. On top of this, because fees are often levied per-unit instead of by square footage, it often makes more sense for a developer to build one 5,000 square foot mansion, instead of four 1,250 square foot townhouses. AB602 changes this so that fees are charged by the square foot.

The bad

All of this shit should've happened last year, before corona hit, but a certain LA assemblyman who's speaker of the Assembly blew the deadline to pass the bill, wasting a whole year.

The ugly

Unnecessary mandatory parking laws survive. The best, most important bill of the cycle (AB1401) would've eliminated mandatory parking near train stations. The state senator for Burbank, Glendale and Pasadena (Anthony Portantino) killed it. This sounds like a not-so-big deal, unless you know that most local laws legally require new buildings to be half parking. These laws make no sense given that LA has a housing crisis, and an under-used Metro.

But hey, people have their reasons.


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