Elias: California’s new housing law unlikely to help the many who need it

By far the most attention in this fall’s California legislative session went to Gov. Gavin Newsom’s plan for a special redistricting election early in November to counteract a Texas move aiming to convert Democratic House seats there into Republican ones.

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However, another new law just signed by Newsom will eventually prove far more consequential to the future of California cities. It’s called Senate Bill 79 and will leave many California skylines altered, once it plays out, in the direction of population-dense high-rise buildings.

Yes, multi-unit apartment construction is down statewide this year from last year’s figures by about 20%, making 2024 construction look like it may have been on steroids. The drop comes largely because new apartments today typically need $4,000 to $5,000 in monthly rent just to break even.

However, SB 79 has the long-term potential to change things in the name of housing density that could help solve the state’s shortage. The problem is that it probably won’t do that soon because the vast majority (about 70%) of units being built are to be rented or sold at market rates rather than seeking occupancy as subsidized affordable housing.

Given that well more than half of all California renters pay higher than 30% of their income for housing, relatively few can afford what are called market rates. So thousands of units built in the last three years now lie vacant, while shortages persist elsewhere.

Here’s what SB 79 sponsor and state Sen. Scott Wiener, D-San Francisco, aims to do: Create a series of mini-downtowns near major transit stops with up to nine-story buildings gradually dropping off in all directions into two-and-three story construction that would often stretch into single-family areas nearby.

Because of resistance from rural lawmakers, the upzoning near transit hubs will only apply in eight urban counties. When big changes come, they will be in Los Angeles, San Francisco, Sacramento, Santa Clara, Alameda, San Mateo, San Diego and Orange counties.

Height limits will depend on just how much bus and light rail traffic a stop handles. For the busiest stops (designated as “Tier 1”), though, no local government can limit heights to less than 75 feet for buildings within a quarter-mile of the stop.

No one knows how many of these buildings will actually rise over the next few years. If developers doubt they can make profits from market-rate units mixed with a lesser number of affordable ones, they won’t build very much. Many have such qualms due to the pricing problem. So the trouble with much new construction in California is that most California renters can’t afford to live in it.

Two places whose nature this law won’t change soon are Altadena and the Pacific Palisades district of Los Angeles, both decimated in last January’s firestorms. Unless transit agencies run major new routes through them, they will be exempt from the top heights. There are no such plans today.

Then there’s the matter of pricing out many who now live near transit stops. As a general rule, these immediate areas are less attractive and less desirable than nearby single-family zones, so rents and prices are lower there. Tear down existing housing and replace it with more modern and expansive units, and current residents could be priced out.

However, when Assemblymember Rick Zbur, D-West Los Angeles, argued that SB 79 would be destructive for existing lower-cost neighborhoods, he was laughed off, while the bill passed the state Senate with applause from most legislators present. Also ignored were complaints that SB 79 removes any authority that many existing homeowners have over their surroundings.

These kinds of reasons were behind the 8-5 vote by which the Los Angeles City Council opposed the measure. The council called for Los Angeles to be exempted because it already has a state-approved housing plan with thousands of units underway.

Labor unions backed it, though, and that was pretty much all the Legislature needed as most Democratic legislators get a big slice of their campaign money from organized labor. The upshot is that SB 79 will solve few immediate housing problems, while not helping the many Californians who will continue to find new housing priced beyond their means.

Email Thomas Elias at [email protected], and read more of his columns online at californiafocus.net.