The aftermath of California’s SB 50: meeting the challenges of affordable housing

California Senate Bill 50, introduced late last year by Sen. Scott Wiener, proposed significant changes to California’s zoning laws with the hopes of relieving in some significant way our current housing crisis. California is experiencing a shortage of 3.5 million homes according to the California Housing and Community Development Department. To the surprise of many, SB 50 was recently stalled in the Senate Appropriations Committee and further action on the bill has been postponed until 2020 despite strong support by California construction trades, including the State Building and Construction Trades Council of California, which represents 400,000 construction workers in 14 building trade crafts across California. Supporters of the bill expected that it would accelerate the pace of new construction and help to alleviate high housing costs. The bill was defeated by a coalition of suburban groups who oppose increasing density in residential areas. The bill also faced resistance from local governments concerned about losing their control over local zoning laws.

Summary of SB 50. Typical of many national metropolitan markets, single family zoning restrictions in California have contributed to the shortage of affordable housing for both renters and owners. A new generation of multi-family housing development would have been implemented under SB 50 with the following provisions:

Streamlined Process for Multi-Family Structures. The bill would establish a ministerial review and approval process to streamline the construction of multi-family structures on vacant land, or to convert existing structures consisting of up to four residential dwelling units. The bill would limit the authority of local agencies to impose parking standards on a streamlined development and exempt such projects from the CEQA approval process.

Equitable Communities Incentive. Local jurisdictions would be required to grant an “equitable communities’ incentive” for qualifying projects near transit or employment opportunities. In exchange, projects would have to allocate a portion of the units as affordable. These projects would still have to comply with the California Envirnomental Quality Act and local restrictions but would be exempt from maximum height restrictions less than 55 feet and any minimum parking requirements.

Sensitive Communities. The bill would delay implementation for five years in potentially sensitive communities that are at risk of gentrification and displacement. Sensitive communities may satisfy those requirements by developing a community plan that encourages multi-family housing and complies with minimum affordability standards found in the bill.

Housing Obstacles Created by Single Family Zoning. The narrative behind the profligation of single-family zoning in the United States has at its base residential segregation. A brief Supreme Court case history illuminates these issues.

Buchannan v. Warley (1917). In 1917 the U.S. Supreme Court invalidated a Louisville, Kentucky zoning ordinance whose purpose was the following:

“An ordinance to prevent conflict and ill-feeling between the white and colored races in the City of Louisville, and to preserve the public peace and promote the general welfare, by making reasonable provisions requiring, as far as practicable, the use of separate blocks, for residences, places of abode, and places of assembly of white and colored people, respectively.”

The court held that while the police power for municipalities is broad, exercise of that power does not justify the passage of a law or ordinance which runs counter to the limitations of the due process and equal protection clauses of the U.S. Constitution.

Village of Euclid, Ohio v. Ambler Realty Co. (1926). In Euclid, the U.S. Supreme Court upheld a village council comprehensive zoning plan that related and restricted the location of trades, industries, apartment houses, two family houses, and single-family houses to the lot area to be built upon and the size and height of buildings. The court held that exclusions of buildings that are devoted to business and trade for residential districts bears a rational relation to the health and safety of the community.

Shelley v. Kraemer (1948). Empowered by the Euclid decision, over the next two decades owners and developers imposed private deed restrictions on residential properties, with the goal of racial segregation. In the seminal case of Shelley v. Kraemer, the U.S. Supreme Court reviewed private restrictive covenants in Missouri and Michigan, the purpose of which was to prevent the sale of properties to individuals “not of the Caucasian race.” Petitioners in Shelley contended that judicial enforcement of the restrictive covenants violated rights that were granted to petitioners by the Fourteenth Amendment and by the various Acts of Congress that were passed following the adoption of the Fourteenth Amendment. While the court held that racial restrictions were violative of the Constitution and acts of Congress, the court expressly noted that “restricted use of the properties for residential occupancy, as such, is not forbidden.”

Growth of Single-Family Dwelling Restrictions. In light of these decisions, municipalities and developers proceeded to enact a variety of single-family dwelling restrictions both in zoning laws and private covenants. These restrictions, while apparently neutral on their face, were once again designed with the goal of further segregating housing opportunities in residential areas. These laws and restrictions created further barriers to developing affordable housing and when combined with discriminatory lending practices, which including redlining residential areas for residential financing opportunities, residential segregation became even further entrenched.

Minneapolis/Portland/Seattle/Austin. The prelude to Sen. Wiener’s efforts in introducing SB 50 in California was the cities of Minneapolis, Portland, Seattle and Austin all considering a variety of ways in which single family zoning restrictions could be limited to facilitate more affordable housing and multi-family options. In one fell swoop, in December 2018, the Minneapolis City Council enacted Minneapolis 2040, a comprehensive Plan to permit three-family homes in a variety of the city’s residential neighborhoods, and to abolish parking minimum requirements for all new construction. The plan further enabled the development of high-density buildings in major transit centers. The unanimous approval of the plan by the City Council was based on the conclusion by the council that single family zones in Minneapolis have historically been devised as a way to keep black Americans and other minorities from moving into various neighborhoods.

Objections to SB 50. The objections raised by those opposing SB 50 included the following:

• Too much density near transit areas

• Too much power in the hands of the developers and too little power in the hands of local zoning authorities

• Gentrification challenges

• Concerns that the modifications would not lead to more affordable housing

Going Forward. Some of the objections raised by those opposing SB 50 were certainly valid. Nevertheless, the fact of the matter is that in the context of current zoning, there is little land for development of small residential density in the Los Angeles and San Francisco Metropolitan Areas. Unless we can come up with some creative ways to cut into the restrictions imposed by single family zoning, we will have no chance of making a dent in the housing challenges facing us. Some of the proposals to consider include the following:

• Permit separate single-family cottages on single family lots

• Reduce and redefine parking requirements

• Relook at ways to encourage residential small-scale density in single family neighborhoods

• Create “affordable” opportunity zone-like alternatives

• Proposition 13 reform

All these issues were brought front and center by Sen. Wiener with the introduction of SB 50. Time will tell whether the Legislature can address some of these issues when the next iteration of SB 50 comes forward. 