Overview

On October 9, 2019, Gov. Gavin Newsom signed the Housing Crisis Act of 2019 (HCA) into law, commonly known as Senate Bill 330 (SB 330) to respond to the California housing crisis. SB 330 is based on the idea that needed housing has largely already been planned for by local communities. According to a 2019 report prepared by UCLA Lewis Center for Regional Policy Studies, cities and counties in the State have collectively approved zoning for 2.8 million new housing units. However, the housing is not getting built. Developers contribute the lack of housing production to growing regulatory requirements, permit processing delays, and excessive impact and service fees. The HCA aims to:

1. Increase residential unit development;
2. Protect existing housing inventory; and
3. Expedite permit processing.

This law made a number of modifications to existing legislation, such as the Permit Streamlining Act and the Housing Accountability Act and became effective on January 1, 2020. Under this legislation, municipal and county agencies are restricted in what regulations can be applied to eligible housing development projects. The HCA includes a sunset clause where the law would no longer be in effect as of January 1, 2025; however, on September 16, 2021, Gov. Newsom signed Senate Bill 8 (SB 8), which extended the HCA to January 1, 2030. The HCA affected the following State Government Code Sections: 65589.5, 65905.5, 65913.10, 65940, 65941.1, 65943, 65950, 66300 and 66301. Applicants are encouraged to review the specific details of these Government Code Sections as this webpage is intended to summarize the major provisions of the law.

Eligible Projects for SB 330 Processing

Projects that meet the following criteria are eligible for benefits afforded under SB 330 [Gov. Code Section 65589.5(h)(2)]: 

• Residential projects, excluding hotels, assisted living or other commercial dwelling units. Single-family, Accessory and/or Junior Accessory Dwelling Units are excluded from dwelling unit count;
• Mixed-use development consisting of residential and nonresidential uses with at least two-thirds of the square footage of the project designated for residential use (not including hotels, assisted living or other commercial dwelling units); or
• Transitional Housing or Supportive Housing project (see definitions of each term in Chapter 30.04 of the Encinitas Municipal Code).

The HCA does not apply to housing development projects located within a very high fire hazard severity zone. 

Residential Housing Unit Protections

The HCA prohibits a reduction to residential density through a "no net loss" provision for the removal of residential housing units with redevelopment projects regardless of underlying zoning and density designations [Gov. Code Section 66300(d)]. For example, a residential duplex cannot be demolished or converted to a single-family residential dwelling unit as this would constitute a net loss of one residential unit. However, the duplex could be demolished or converted to a single-family residential dwelling unit if an Accessory Dwelling Unit or Junior Accessory Dwelling Unit were also proposed in conjunction with the project and further provided that the duplex is not defined as a "protected" unit. 

Protected Unit

Protected units are residential dwelling units that are, or were, within the past 5 years either:

1. Subject to a recorded covenant, ordinance, or law restricting rents to levels affordable to low- or very low-income households;
2. Subject to any form of rent or price control through a public entity’s valid exercise of its police power;
3. Rented by low- or very-low income households; or
4. Withdrawn from rent or lease pursuant to the Ellis Act within the last 10 years.

The property owner or applicant must complete an income verification form to determine whether the units proposed for demolition are considered “protected” under the law. If the income of the prior occupants is unknown, then the unit is automatically deemed "protected" [Gov. Code Section 66300(d)(2)(F)(vi)]

Protected Unit Development Requirements

When a unit is deemed "protected," the same number of units must be included and also be of an "equivalent size" as the units that exist on the property with a development project. Equivalent size means the replacement units must contain at least the same total number of bedrooms as the units being demolished. In addition, existing residents that will be displaced shall:

1. Be allowed to remain until six months before construction begins with proper notice;
2. Be allowed to return at their prior rental rate if the demolition does not proceed and the property is returned to the rental market;
3. Relocation benefits; and
4. A right of first refusal for a comparable unit in the new project at an affordable rent for a minimum term of 55 years.

Preliminary Application and Streamlining

The HCA establishes a requirement for the City to implement a preliminary application process for eligible housing development projects. This application process is not required for all housing development projects, but it is required for applicants with eligible projects that seek the vesting and processing benefits offered under SB 330. The intent of this process is to make the development review process faster and provide certainty to an applicant by locking in the development requirements, standards, and fees at the time a complete application is submitted. By doing so, the City is prohibited from applying new ordinances, policies and standards to a development with a complete preliminary application.

As a part of this facilitation, the City compiled a checklist that details the criteria of what is needed to complete a preliminary development application. The application checklist can be found on the City’s application and information webpage. Projects consisting of only a single-family residential development, Accessory and/or Junior Accessory Dwelling Units are not eligible for preliminary application processing. For the processing timelines implemented under SB 330, please review the workflow diagram available in the "Links" window. SB330 also provides more provisions for disclosure obligations when the City rejects an application due to incompleteness and is precluded from requesting anything not noted on the preliminary application checklist. 

Is there an exception to the fees frozen as part of a Preliminary Application submittal?

Yes, in the case of fees, charges, or other monetary exactions, increases are allowed resulting from an automatic annual adjustment based on an independently public cost index that is referenced in the ordinance or resolution establishing the fee.