California E&S Insurance

The state legislature has made the big legal changes necessary to fix the housing crisis - fixing zoning, CEQA and parking minimums. Let's talk about what comes next. **BOTTOM LINE, UP FRONT: There's been a lot of progress to fix the state housing crisis, because the Legislature has finally decided to fix the laws that got us into this mess. Credit where credit is due. But there's still a lot of technical changes that need to be made to really get housing construction going.** There's going to be two parts to this post. The first half will be a summary of what the Legislature has done to fix things. The second half will be what the Legislature still needs to fix. You'll note that there's not a whole lot of local reforms in here. Some city councils have acted in good faith to do their part, like Sacramento, Oakland and San Diego. But most (cough LA City cough) have fought these reforms tooth and nail. ***Let's talk about what the Legislature has fixed so far.*** There are a lot of major reforms on this list. So far, they've: * **Reformed the minimum parking law**. In most places it used to be legally required to absurd amounts of parking for commercial and residential buildings. This is how you get crazy stuff like the Beverly Center in West LA, which is half parking by square footage, or my old place in Koreatown, which was a 1000-square-foot apartment with 800 square feet of parking. Bill [AB2097](https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220AB2097) reformed the law so that no parking is required close to public transportation. (This was a pet project of Glendale Assemblymember Friedman, who is now in Congress.) * **Re-legalized small-scale redevelopment.** In 2016, the State legalized ADUs statewide. It's been a massive success at building housing on the cheap, and an entire cottage industry of ADU builders has grown up. The City of LA even got in on the game and released a [standard ADU pattern](https://dbs.lacity.gov/approved-standard-plans/you-adu) that can be used by anyone. The follow-up bills to that have expanded the ADU law to cover other types of small-scale buildings that any general contractor can build. [SB9](https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220SB9) legalized duplexes statewide. [SB684 and SB1123](https://www.allenmatkins.com/real-ideas/sb-684-and-sb-1123-expedite-the-entitlement-path-for-small-starter-home-developments.html) made it legal to build small-lot townhouses in apartment zones and vacant single-family lots. (They really should allow townhouses in all single-family lots, but I digress.) * **Rezoned the whole state to allow apartments near transit.** The big rezoning bill, [SB79](https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202520260SB79), passed this year after seven years of brutal political fights. (Notably, its predecessors, SB827 and SB50, fell short of Newsom's desk in 2018 and 2020.) SB79 legalizes mid-rise apartments near high-capacity transit, like Metro lines and frequent Metrolink. This is how walkable cities like SF, DC, Boston and Philadelphia were built in the past. It can't be understated how important it is. * **CEQA reform.** For decades, the [California Environmental Quality Act](https://lhc.ca.gov/wp-content/uploads/Report279.pdf) was used by nosy neighbors in bad faith to stop new housing and transit from being built. No longer. In 2020, the Legislature temporarily exempted transit, pedestrian and bike projects from CEQA under SB288, and made the exemption permanent in 2025. New housing was exempted from CEQA this year, through Bill AB130/SB131. These laws dealt with the biggest, most glaring issues. ***What comes next: sweating the small stuff.*** Now that the big stuff has been dealt with, it's time for the legislature to get serious about the details. There's a whole lot of small scale things to fix to get more housing built. * **Making it possible to build condos again.** New condo construction has almost completely stalled in California in the last 15 years because of the unintended consequences of California's condo defect law. Unlike other states, California allows condo owners to sue for defective construction up to 10 years after construction is complete. (This is much longer than rental buildings, which have a four-year statute of limitations.) Making matters worse, going to court is the only available method of redress. This system is expensive, has led to skyrocketing insurance premiums and it has basically killed off the new condo market. Other places, like New Jersey and Canada, have a standardized defect resolution program which is much cheaper than suing in court. Alternatively, like Utah, the State could shorten the statute of limitations for condo defects. Ten years is a long time to discover a construction defect. * **Staircase reform.** California is really behind the curve when it comes to its building codes, and the single largest issue with the building code is the stair code. California apartment buildings taller than 3 stories are legally required to have two sets of staircases. This two stair requirement dates back to the bad old days, when buildings were built with much more flammable materials. [It's now obsolete, thanks to modern building materials and firefighting advances that make single-stair apartment buildings just as safe in a fire as double-stair buildings.](https://www.pew.org/en/research-and-analysis/reports/2025/02/small-single-stairway-apartment-buildings-have-strong-safety-record) (An apples to apples comparison is possible because single-stair buildings have been legal in New York City and Seattle for decades.) The double stair requirement is a huge drawback in three ways. First, two sets of stairs usually makes it geometrically impossible to build an apartment building on a typical 50' x 125' lot. Developers have to buy adjoining lots to build a code-compliant apartment building, which is expensive and slow. (The most common type of LA apartment - [the postwar dingbat](https://upload.wikimedia.org/wikipedia/commons/0/0c/Dingbat_LaTraviata.jpg) - was almost always built on a single lot.) Second, double-stair buildings are just worse to live in. Most double-stair apartments only get sunlight from one direction because all units have to face the hallway. Single-stair buildings don't have this problem because apartments wrap around the staircase and elevator, giving sunlight from multiple directions. Third, single-stair buildings make it easier to build [family-sized 3-4 bedroom apartments - something that's completely normal in Europe but extremely rare in LA](https://i.imgur.com/ItfeySd.png). * **Standardized building codes.** The state building code exists, but every city customizes it. These local modifications make it more complicated for developers to cross municipal lines, and they make construction more expensive. In France, by comparison, there is one national building code, which makes it possible to do things at industrial scale. For example, it's common in Europe to have [factory-built bathroom modules,](https://www.porcelanosa.com/trendbook/app/uploads/2023/11/bano_prefabricado-hotel-porcelanosa_offsite.jpg) which are prefabricated off-site and [plopped in wholesale during the construction process,](https://baudet-sa.com/en/our-references) instead of each bathroom being built on-site from scratch as in the US. * **Impact fee reform.** It's common for cities to charge fees to build new apartment buildings. But it's even more common for city fees to be used as a weapon against apartment developers. I don't have a good study of LA impact fees on hand, so I'll use [Palo Alto in NorCal as an example.](https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=191c51c5-d21c-400c-99aa-6b72a8f07b1b) There, the fees are so high that they make new apartments uneconomical to build in one of the richest places on the planet. [It's effectively a 15% tax on new construction.](https://i.imgur.com/hCgIeZU.png) (If someone has a study from LA that analyzes this dynamic, I'd love to see it.) * **Uniform anti-displacement standards.** We all agree that it's bad when people get displaced from their neighborhoods by gentrification. But the current law is a patchwork of different standards, and it's genuinely hard to determine what's kosher, even for lawyers. For a simple example: SB684 (the townhouse law) bans the demolition of units occupied by tenants in the last five years. The standard under SB79 (the homes-near-transit law) is seven years. And that's just the beginning of it, because each city has its own flavor of anti-displacement law that may or may not match the state standards. (Colleagues who work in Sacramento are aware of this problem; they're going to try to establish a uniform standard in the next year or so.) * **Affordable housing reform.** A lot of cities require a percentage of new units to be rent-controlled. Pasadena requires 20%; Whittier requires 15%; Beverly Hills requires 10%; unincorporated LA County ranges between 10 and 20%, unless you're in the Antelope Valley or Santa Clarita. It sounds like a good idea to require a percentage of new units to be affordable. But the money for those below-market units have to come from somewhere, and the money ain't coming from the gov. Some developers deal with this by building ultra-luxury units, which turn enough of a profit that they can afford to build rent-controlled units. Some can finagle it carefully, so the numbers work out. But a lot of them see these requirements and say "lol nope, I'm out." NIMBY city councils know this dynamic very well. You'll often see them require high affordable housing percentages in bad faith, knowing that 20 percent of zero is zero. There's a few different ways to fix this. The obvious one is to fund the mandatory affordable units directly, like [Portland](https://www.sightline.org/2024/02/23/now-fully-funded-portlands-affordability-mandate-should-be-a-model/) does. Another way is to replace the affordability mandate with an expanded density bonus. That is, if developers build X units of unprofitable affordable housing, they can build an extra Y units of profitable market-rate housing, like what LA City already does with the [Transit Oriented Communities](https://planning.lacity.gov/plans-policies/transit-oriented-communities-incentive-program) program. A third way is simply to make it unnecessary, by building so much housing that it doesn't matter whether a unit is rent-controlled or not. (Hey, a guy can dream, right?) * **Proposition 13.** Last but not least, there's Proposition 13. For those who don't know what it does, Proposition 13 is the law that got us into this mess in the first place. Property tax in California is based on the price the owner paid, not what it's actually worth. Identical properties can have wildly different valuations. Just to give a personal example, my brother and sister-in-law used to rent in a condo building. Their landlady bought during the Great Recession, and pays $5200 a year in tax. The downstairs neighbor bought in '07 during the real estate boom, and pays $9100 a year in tax. The upstairs neighbors bought in 2020 and pay $11000 a year in tax. Aside from being on different floors, they're exactly identical units. Worse, Proposition 13 also applies to commercial property, industrial property, and even vacant lots. It's completely unjustifiable. To give an example of how Prop 13 is abused, [check out this empty lot in Inglewood.](https://www.zillow.com/homedetails/316-E-Hardy-St-Inglewood-CA-90301/95538616_zpid/) The owner bought it for $349,000 in 2015. The lot has been vacant for over a decade. The owner has been trying to flip it the whole time - and they're currently asking for four times what they originally paid. Because Prop 13 keeps property taxes artificially low, there's no incentive for the owner to sell. Stuff like this happens all the time, and it's bad. I fully expect more reform attempts as the housing crisis continues, but I don't think it'll happen while Gavin Newsom is in office. (He's too busy running for President.) ***So, What's the TL;DR, then?*** There's been honest-to-god progress on the housing front, and thankfully the big stuff is done. Now it comes time to do the hard work of getting the details right. But it's not going to be easy. NIMBYism has been a dominant force in California politics for half a century. The YIMBYs are winning - but it's a long way yet until we're out of the woods. *x-posted from /r/lostsubways.*

{
  "score": 0,
  "title": "The state legislature has made the big legal changes necessary to fix the housing crisis - fixing zoning, CEQA and parking minimums. Let's talk about what comes next.",
  "subreddit": "LosAngeles",
  "num_comments": 70,
  "scrape_method": "apify"
}