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With California real estate prices at record highs, state lawmakers are proposing new strategies to increase the limited supply of housing. 

One such measure is Senate Bill 6, which would exempt developers from going through the often arduous rezoning process if they intend to replace an underutilized office or commercial property with multi-family housing. 

The bill, known as the Neighborhood Homes Act, was authored by State Senator Anna Caballero (D-Salinas). SB 6 passed the Senate in late May and is now with the Assembly, where it has undergone its first reading.

The COVID-19 pandemic created a wave of retail closures as lockdown restrictions limited capacity and consumers shifted to online shopping. Vacant storefronts, including big-box retailers and strip malls, could be prime areas for multi-family housing as they tend to be centrally located and offer an abundance of parking.

The proposed legislation wouldn’t force developers to prioritize housing over retail, but it would make it more challenging for local governments to reject multi-family projects planned for untenanted office or commercial sites. Opponents of SB 6 argue that local governments are best equipped to make such zoning decisions.

For a property to qualify for flexible zoning, 50 percent or more of the usable square footage would have to be vacant for a period of at least three years prior to the application’s submission. A proposed multi-family development would need to dedicate at least two-thirds of its square footage to residential use, and must not abut an industrial zone. The project would have to meet all other local planning standards, such as design guidance or open space requirements.

SB 6 is among a number of pro-housing bills that will be considered in this session of the California State Legislature. Last week, Livabl reported on AB 1401, which seeks to remove minimum parking requirements for new residential and commercial developments located near public transportation. The bill aims to free up space for much-needed housing while lowering construction costs.

A 2018 study from the California Department of Housing and Community Development found that California builds an average of 80,000 homes per year, falling well short of the 180,000 new homes that are needed annually to keep up with demand.

SB 6 must go through two more readings and a vote in the Assembly. If the bill is signed into law, California will likely become the first state to sanction multi-family housing on zoned commercial properties.

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