California Strip Malls To be Upzoned Saturday

Major rezoning law to take effect July 1st will open up most strip malls to housing.

A map of commercial zones (blue) and high quality transit areas (in yellow) in Berkeley, California. Five out of the seven major corridors in blue only will be upzoned, with increased height and density if its in the yellow. Note: Berkeley is a poor example as your average California suburb and Southern California city has significantly more retail and parking zoning than this.

The big housing victory of the 2022 California legislative session will finally take affect this Saturday, June 1st of 2023. As I broke down when it passed, AB 2011 allows the plentiful parking lots and strip malls — which make up much of California’s landscape — to be converted into 4 - 6 story multifamily housing. AB 2011 explicitly overrides local zoning ordinances to allow for housing with extremely swift approvals and no parking requirements. Its quasi-competitor and twin law, SB 6, also takes effect on Saturday which was the product of the big union compromise last year.

To summarize why there are two laws: the Carpenters Union, which represents a plethora of residential union workers, and several public sector unions supported AB 2011, written by Assembly-member Buffy Wicks of Oakland, which required union-level wages as labor standards. The Building Trades, representing most other construction unions, put their weight instead behind SB 6, written by Senator Anna Caballero of Merced, which requires a plurality of union labor. Here’s an article on the differences between prevailing wage and skilled and trained.

The great compromise between the unions happened which saw the passage of both laws at the same time. Increased rates in labor requirements is counter-balanced by the lower rate of affordable housing requirements. AB 2011, with its less strict prevailing wages, requires at least 15% low income housing for every project. SB 6, with its very strict union hiring, requires no subsidized housing at all.

But most have focused on AB 2011 because of its streamlining and anti-lawsuit component which SB 6 does not have. Any housing project submitted under AB 2011 that’s legally and environmentally compliant, as determined by a city’s planning department, will acquire its entitlements within 90 - 180 days of submission. Thus bypassing the standard years of approvals by various boards and city councils. It’s also immune from environmental lawsuits like CEQA. These provisions are nearly identical to the highly successful SB 35 law which has enabled housing projects all over California.

On Saturday morning, Californians will wake up to their zoning maps being superseded with the following major changes:

• Any parcel zoned (not necessarily used) for commercial, office of parking purposes and beside a freeway, will automatically be eligible for 100% low income housing projects. I.e. publicly-funded or nonprofit projects.

• Any parcel that’s zoned for commercial or parking use and is located directly adjacent to a street greater than 70 feet will be eligible for mixed-income privately-funded housing projects.

• 15% of the proposed homes must be deed-restricted to low income families and the law requires a mix of subsidized homes from 0 to 80% of county median income. For condos, the developer can opt for 30% moderate income housing as an alternative, for families making between 80% of 120% of county median income.

• If the street is smaller than 100 feet then the project can be 3-stories high and at least 30 homes per acre.

• Streets greater than 100 feet goes up to 4-stories high and at least 50 homes per acre.

• Parcels within a half-mile of a “major transit stop” and within cities of more than 100,000 residents can go up to 6-stories high and at least 70 homes per acre.

• If located in a metropolitan zone, rather than a suburban zone, those aforementioned homes per acre increase by 10.

• No requirement for parking of any AB 2011 project.

• The housing project must be approved or denied by planning departments within 60 days if the development consists of 150 homes or less; 90 days for projects greater than 150 homes.

• The alternative law is SB 6, which does not have any streamlining provisions but requires no low income housing and allows for housing development on any parcel that’s zoned for commercial or office use.

• SB 6 requires that housing projects must obey local height and parking requirements of the nearest residential zone to the parcel.

AB 2011 is a law primarily aimed at Southern Californian or a suburban land use. Rezoning large parking lots and wide streets with retail use is clearly aimed at malls and commercial drive-ins that are commonplace outside the oldest cities like San Francisco. But it’ll still upzone quite a few major corridors even in the older cities, where car-centric infrastructure still has a presence.

Don’t expect this law to start pumping out housing immediately on Saturday. It’ll take many months for builders and property owners to get an idea of what the law does. Developers often have no idea themselves what these laws are until after they’re enacted. But I do expect a quicker start than say the highly anticipated yet rather lackluster Builder’s Remedy.

The Builder’s Remedy was an experimental scare-tactic law never intended to see use. The few gutsy property owners that used it were immediately sued by neighbors and blocked by local governments with no legal clarity. AB 2011 and SB 6 are explicit laws with clear provisions. AB 2011 in particular is beefed up with legal immunity from lawsuits and its unique administrative approval cannot be stopped by local governments. As it’s already been sufficiently legally tested with SB 35.

Private developers have not made much noise about AB 2011 and SB 6 as the Building Industry Association doesn’t like the labor requirements in either. But they’ll likely realize the advantages of the quick streamlining and security being offered as they often do with big rezoning plans. Especially with the growth of vacant commercial properties in every single city as e-commerce empties out parking lots and malls, from pharmacies to department stores. Nonprofit developers will probably immediately start trying to entitle projects on any commercial parcels they have the funds to acquire, as wide swaths of California are opened up to low income housing.

An analysis by the mapping company Urban Footprint concluded that AB 2011 under current market conditions will likely result in 1.6 million to 2.4 million more homes, including 300,000 to 400,000 low income homes. AB 2011 is estimated to reduce water consumption by 40% and a 45% reduction in carbon emissions from new population growth that would otherwise live in suburban sprawl.

On Saturday, California will mark its largest move away from the mid-20th century automotive age and into the future of transit-oriented urbanism. Ironically, many of the homes to be built on these commercial strips in places like Los Angeles were themselves housing a half-century ago.

—

Thank you for reading my Substack! I have more exclusives coming including subscriber-only content on housing. Please share and subscribe for more.