AB 73 Effects on the CEQA Process for Housing Projects

California passed 15 bills designed to address the state’s housing problems, including solutions to streamline housing approvals, enact inclusionary housing requirements for residential rental projects, and generate funds for affordable housing projects. Three bills–-SB 35, SB 540, and AB 73–-have the greatest effect on the California Environmental Quality Act (CEQA) process for housing projects.

This article, the third of a three-part series, examines AB 73, a bill that requires 20% of residential units to be categorized as affordable.

AB 73: Establishing Housing Sustainability Districts

AB 73 takes a similar approach as SB 540, but uses zoning tools to authorize cities and counties to establish, by ordinance, a “Housing Sustainability District.” These districts must be in areas with zoning that allows residential use by right and those that have suitable transit access.

According to the bill, 20% of all residential units within the district must be affordable (very low, low, or moderate income), and any individual market-rate project must set aside 10% of units for low-income households. Minimum multifamily densities apply, and the bill includes restrictions on the total amount of the jurisdiction’s housing supply that can be included in the district.

Projects are subject to prevailing wage and “skilled and trained” workforce requirements and approvals under the Subdivision Map Act may also be considered ministerial if the project is subject to prevailing wage and is either funded by the low-income housing tax credit or utilizes a skilled and trained workforce.

Decisions on project permit applications must be made within 120 days, and once an environmental impact report (EIR) has been certified for a district, no further CEQA compliance is required for projects that meet the requirements. In addition, a local agency that implements a housing sustainability district may be able to receive an incentive payment from the state.

The Gist

From a CEQA perspective, there seems to be limited benefit. A prerequisite of the bill is to establish a zoning district that allows residential uses “by right.” If a lead agency is willing to take that step, they don’t need to jump through the other hoops of AB 73, because CEQA is not triggered by ministerial projects.

However, the bill offers a path for ministerial approval of subdivisions for those developers willing to meet the extra requirements. Since approval of the tentative map or parcel map is a discretionary action (even if the housing itself is a permitted use) this could be helpful for some projects.

Efforts to encourage housing tend to focus on multifamily projects, since they often face the greatest scrutiny and are more likely to include affordable units. Perhaps the possibility of state funding will be an incentive to establish housing sustainability districts for those jurisdictions already inclined to approve more housing.

Further Reading

AB 73 amends Government Code section 65582.1, adds Sections 66200-66210, and adds Public Resources Code sections 21155.10 and 21155.11.

Part 1 of this three-part series, published in March, looked at SB 35, a bill that bypasses the standard CEQA process and streamlines approval for multifamily projects. Part 2, published in June, examined SB 540, a bill that authorizes cities and counties to establish a “Workforce Housing Opportunity Zone.”

For more information, contact Senior Environmental Project Manager Brian Grattidge at bgrattidge@dudek.com.