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California Aims To Speed Up Affordable Housing Development With New Law

Gov. Newsom Signs Legislation To Cut Down Environmental Reviews

Affordable Housing Development

Eleven of the nation's top 20 most expensive apartment rental markets are located in California. (Getty Images)

By Jack Witthaus

CoStar News

September 6, 2023 | 3:07 P.M.

A new California law may quicken review times for affordable housing developments as state lawmakers respond to some of the highest costs for residential space in the nation.

The law, Senate Bill 406, was signed on September 1 by Gov. Gavin Newsom and stops certain types of repetitive reviews under the California Environmental Quality Act, according to a statement. Known as CEQA, the more than 50-year-old Act makes state and local agencies disclose the environmental impacts of proposed projects. The act also allows for projects to be sued, slowing down approvals.

The new law exempts affordable housing projects with local financing from a separate CEQA review, according to a statement by California state Sen. Dave Cortese, who sponsored the bill. These affordable housing projects, though, still have to go through a normal CEQA review on the project itself.

“SB 406 will speed up housing by cutting bureaucratic red tape," Cortese said in a statement.

Eleven of the nation's top 20 most expensive apartment rental markets are located in California, according to CoStar data. California's high cost of housing is due to the lack of supply to meet demand.

Newsom said in 2018 that California needs to build 3.5 million new homes to alleviate housing demand. But by 2022, only 13% of that housing had been permitted, according to LAist.

Real estate professionals and government officials have long complained that CEQA lawsuits slow down housing development in California. In 2020, nearly 48,000 housing units were targeted with CEQA lawsuits, according to one study. The state of California, on average, builds 110,784 homes per year, the study said.

The average monthly rent for an apartment in San Francisco is $3,040, and in Los Angeles, the average is $2,236, according to CoStar data.


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