By Patterson & O'Neill and YIMBY Law
On September 19, 2024, Governor Newsom signed Assembly Bill (“AB”) 1893 into law, which amends the Housing Accountability Act (“HAA”) and Builder’s Remedy. The HAA is a state law, which limits a jurisdiction’s ability to disapprove or reduce the density of qualifying housing projects. The purpose of the HAA is ensure that jurisdictions do not reject or downsize housing projects that are crucial for jurisdictions to meet their obligations to plan for housing in their communities without a thorough analysis of the economic, social, and environmental effects of the proposed action.
The Builder’s Remedy is a part of the HAA, which allows projects to bypass local development standards in cities and counties that have failed to adopt a substantially compliant housing element.
Effective as of January 1, 2025, AB 1893 amends the Builder’s Remedy by bringing additional clarity to the law and imposes new objective standards on Builder’s Remedy projects (such as site restrictions and density limits), while reducing the percentage of affordable housing that projects must include to qualify for the law.
AB 1893 is an attempt by the Legislature to make the Builder’s Remedy a more usable tool for developers, while restricting local agencies’ ability to deny Builder’s Remedy projects. One downside is that AB 1893 may result in smaller Builder’s Remedy projects.
In California, each city and county is required to plan for enough housing in its jurisdiction to meet its Regional Housing Needs Allocation, which is the jurisdiction’s share of the region’s housing needs. Since 1990, the Builder’s Remedy has been an attempt by the Legislature to incentivize local agencies to adopt timely and compliant housing elements. The Builder’s Remedy is part of the Housing Accountability Act (Gov’t. Code § 65589.5(d)).
When a local agency fails to adopt a housing element that substantially complies with state law, the Builder’s Remedy limits the agency’s ability to disapprove housing developments that include 20% lower-income housing or 100% moderate-income housing, even if the development does not conform to the underlying zoning.
The “problem” that AB 1893 attempts to solve is that the Builder’s Remedy did not have an upper limit to the density, or maximum number of units, that a developer could propose. Developers proposed large Builder’s Remedy projects, which has led to local agencies slow-walking these applications. While Patterson & O’Neill and YIMBY Law have won important lawsuits to force the processing of Builder’s Remedy projects, some members of the Legislature felt the law was too unclear to be useful.
AB 1893 makes six fundamental changes to the Builder’s Remedy and the HAA:
Lower Affordability Requirements for Builder’s Remedy Projects
AB 1893 reduces the amount of affordable housing that needs to be included in Builder’s Remedy projects from 20% to 13%. As of January 1, 2025, a project can also qualify for the Builder’s Remedy by making 10% of its units affordable to very low-income households or 7% for extremely low-income households.
AB 1893 allows local jurisdictions to impose greater affordable housing requirements on Builder’s Remedy projects, but caps them at a maximum of 20% unless the jurisdiction makes written findings that a higher requirement will not make the Builder’s Remedy project infeasible. So a local agency can require a project to have 20% lower-income, very-low income, or extremely low units to qualify for the Builder’s Remedy. We expect local agencies will use this as a tool to deter developers from using the Builder’s Remedy. Although the written findings requirement for each project may deter cities. In fact, in the Arguments in Opposition section of the August 31, 2024 Assembly Floor analysis, the Legislative Analyst’s Office noted that AB 1893 imposes an “unworkable project-by-project feasibility study requirement in order for a jurisdiction to apply a local inclusionary requirement to a builder’s remedy project.”
“Missing middle” projects of 10 units and fewer are not required to include any deed-restricted affordable housing. AB 1893 also makes farmworker housing eligible for the Builder’s Remedy. Finally, AB 1893 now requires that affordable units must have the same number of bedrooms and bathrooms as the market rate units in a Builder’s Remedy project.
New Objective Standards for Builder’s Remedy Projects
AB 1893 clarifies that local agencies can only apply objective, written development standards to a Builder’s Remedy project. A Builder’s Remedy project must be treated the same as other projects, and the agency processing the project must treat a Builder’s Remedy project as if it were proposed on a site with a general plan designation and zoning classification that allow the density and unit type proposed.
If the local agency has no general plan designation or zoning classification that would allow the Builder’s Remedy project proposed by the applicant to be built, the applicant may choose any of the local agency’s general plan designations or zoning classifications that can accommodate the density and unit type of the Builder’s Remedy project and apply it to the project. AB 1893 does not address situations where a jurisdiction does not have a general plan designation or zoning classification that could accommodate the Builder’s Remedy project and this is one area of the legislation which may require additional clarification.
New Density and Site Standards for Builder's Remedy Projects
Previously, the law did not impose any density maximums on Builder’s Remedy projects. AB 1893 imposes density maximums on Builder’s Remedy projects starting January 1, 2025. AB 1893 caps density at the greatest of the following three choices: (1) 50% more than the minimum density for the following jurisdictions: rural counties (15 units per acre), suburban jurisdictions (20 units per acre), and cities (30 units per acre); (2) three times the density allowed by the general plan’s land use element, zoning ordinance, or state law, whichever is greater; or (3) the housing element density for the site.
A developer gets an additional 35 units per acre if the Builder’s Remedy project is within half a mile of a major transit stop, or in a very low vehicle travel area, or high-resource census tract. For Builder’s Remedy projects that are proposed within half a mile of a commuter or heavy rail station, jurisdictions cannot reduce the density of the project below the minimum density required on the site. AB 1893 also prohibits a Builder’s Remedy project from being located on a site where more than 1/3rd of the square footage has been used for a heavy industrial use in the past three years. There was previously no restriction on Builder’s Remedy projects in industrial zones or on sites with industrial uses.
Closes Anti-Builder’s Remedy and HAA Loopholes
AB 1893 attempts to crack down on many strategies that local agencies have used to stop HAA and Builder’s Remedy projects. AB 1893 expands what it to means to unlawfully “disapprove the housing development project” for both Builder’s Remedy and HAA projects. Previously, the HAA only defined a project as being disapproved when a local agency voted or took final administrative action on the project or failed to comply with Permit Streamlining Act deadlines for the project. AB 1893 expands the definition of “disapprove” to include when a local agency:
AB 1893 also adds a new definition of “condition approval” to the HAA, which means imposing or attempting to impose development standards, conditions, or policies on an HAA project. This is a broad definition and highly protective of HAA projects as it will limit the types of conditions jurisdictions are allowed to impose on HAA projects.
AB 1893 prohibits a local agency from (1) using a change to the zoning or the general plan land use designation for the site after a Builder’s Remedy application was submitted to deny or conditionally approve the project; (2) forcing the applicant to obtain a general plan amendment, specific plan amendment, rezoning, or other legislative approval; (3) forcing the applicant to apply for, or receive, any approval or permit not generally required of a project of the same type and density proposed by the applicant; or (4) imposing fees or inclusionary housing requirements on Builder’s Remedy projects solely because they are Builder’s Remedy projects. AB 1893 states that Builder’s Remedy projects cannot be considered or treated as a nonconforming lot, use, or structure for any purpose and are deemed to be consistent with ordinances, regulations, and policies for “all purposes.” It is unclear if the Legislature intended this to be cabined to the policies of a local agency or for it to include the California Environmental Quality Act. Guidance from the Department of Housing and Community Development or litigation may be required to resolve this ambiguity.
AB 1893 makes other incidental changes to the HAA, including clarifying that local agencies bear the burden of proving that a preliminary application is incomplete. AB 1893 also states that a jurisdiction’s actions that are intended to comply with the California Environmental Quality Act, including imposing mitigation measures on a Builder’s Remedy project, do not constitute project disapproval.
New Compliance Period for Court Orders and Expanded Definition of Bad Faith
Previously the HAA allowed courts to impose fines on local agencies that acted in “bad faith” in disapproving or conditionally approving HAA or Builder’s Remedy projects if they failed to carry out a court order within 60 days. AB 1893 drops the 60-day requirement and replaces it with any time period the court chooses. AB 1893 also empowers courts to multiply the fines it imposes for each previous violation by the local agency within the same eight-year planning cycle.
AB 1893 also expands the definition of “bad faith.” Previously, “bad faith” was defined as actions that local agencies took to disapprove or conditionally approve an HAA or Builder’s Remedy project that were frivolous or entirely without merit. “Bad faith” now includes inaction by local agencies that is frivolous, pretextual, or intended to unnecessarily delay a Builder’s Remedy project.
AB 1893 does not change the definition of when a project is “deemed complete” by a local agency, but now shifts the burden of proof from the applicant having to prove that an application is complete to the agency having to prove that the application is incomplete.
Changes to How The Builder’s Remedy Interacts with The Density Bonus Law
AB 1893 clarifies that Builder’s Remedy projects are eligible for the Density Bonus Law (Gov’t. Code § 65915) and that the base density for the Density Bonus Law is calculated based on the underlying Builder’s Remedy project. AB 1893 does not limit a Builder’s Remedy project’s eligibility for density bonuses, incentives, concessions, waivers, or reductions of development standards and parking ratios under the Density Bonus Law. In fact, AB 1893 grants two additional incentives or concessions to Builder’s Remedy projects. Additionally, a Builder’s Remedy project that has 7% of its units restricted to extremely low-income households can now receive the same density bonus as one with 10% of its units restricted to very-low income households.
Ability to Combine the Builder’s Remedy with other State Laws
AB 1893 allows Builder’s Remedy projects to be combined with a streamlined, ministerial approval process for certain jurisdictions that are failing to approve their share of housing. Since AB 1893 deems Builder’s Remedy projects compliant with all applicable, objective general plan and zoning standards in effect at the time an application is deemed complete, developers can combine the Builder’s Remedy with other state laws that allow for by-right processing in certain jurisdictions. For instance, a Builder’s Remedy project could be combined with Government Code § 65913.4 (SB 35 and SB 423), which allows developers to take advantage of a streamlined, ministerial review of their housing projects, if the jurisdiction where they intend to build is falling short of their Regional Housing Needs Allocation (“RHNA”) or has not adopted a housing element that HCD or a court has certified as substantially compliant with housing element law.
Government Code § 65913.4 only requires developers to pay prevailing wages to construction workers on projects with more than 10 units, and the California Environmental Quality Act (“CEQA”) does not apply. Developers seeking to combine the Builder’s Remedy with Government Code § 65913.4 must ensure that their project is on an infill site, and comply with other requirements such as demolition restrictions.
This would allow developers to utilize the streamlined, ministerial approval process for a 10-unit project without having to provide affordable units, pay a prevailing wage, or complete CEQA review. For developers seeking to utilize the streamlined, ministerial approval process for projects with 11+ units, developers have to provide affordable housing consistent with the Builder’s Remedy and Government Code § 65913.4, and pay a prevailing wage.
Developers can confirm the applicability of Government Code § 65913.4 based on HCD’s latest Statewide Determination Summary: https://www.hcd.ca.gov/planning-and-community-development/statutory-determinations. HCD will update its determinations at the end of the first half of the 6th RHNA cycle (2025 for some jurisdictions) and again at the end of the 6th RHNA cycle.
AB 1893 provides vested Builder’s Remedy projects with the option to be subject to the Builder’s Remedy rules pre- or post-AB 1893. To qualify, a developer must have either submitted an SB 330 preliminary application or a “complete” development application within 180 days of its submittal of a complete SB 330 preliminary application. Developers may redesign projects to comply with AB 1893 without resubmitting a preliminary application, even if the revision results in the number of residential units or square footage of construction changing by 20% or more.
Developers may also argue that AB 1893 permits them to pick and choose which of the HAA rules pre- and post-AB 1893 its project will adhere to, as AB 1893 permits applicants to have a Builder’s Remedy project comply with “any or all of the provisions” of AB 1893. Under this theory, a developer who has a vested Builder’s Remedy project before AB 1893 goes into effect, may have the project comply with some of the pre-AB 1893 rules and some of the post-AB 1893 rules, as opposed to choosing whether to comply with all of the pre-AB 1893 or post-AB 1893 rules. If a developer adopts this stance, local agencies may force this issue to be litigated as it is not clear if the Legislature intended to allow developers to pick which post-AB 1893 rules a Builder’s Remedy project can follow.
While we are hopeful, it is unfortunate that Builder’s Remedy projects’ density will be limited by AB 1893, but we hope that the more streamlined process will result in more housing units being built. Cities will, of course, try to find new ways to impede Builder’s Remedy projects, and the Builder’s Remedy may need to be amended again.
This article is for general information purposes only and does not create an attorney-client relationship. The information presented is not legal advice, may not be current, and is subject to change without notice. For advice about a particular situation, please contact us for a consultation.
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