Governor Newsom Signs SB 423 and SB 4 to Expedite Affordable Housing Construction in California
On October 11, 2023, Governor Newsom signed into law SB 423 and SB 4, two important and related affordable housing production bills aimed at tackling the state’s housing crisis. Governor Newsom explained that he signed the bills because of “simple math—California needs to build more housing and ensure the housing we have is affordable.”
SB 423 requires localities failing to meet state housing planning goals to streamline affordable housing projects rather than subject them to the traditional, discretionary process including California Environmental Quality Act (“CEQA”) review. First, SB 423 adds new labor standards to SB 35, requiring that all covered projects over 10 units pay construction workers prevailing wages and all covered projects over 49 units additionally participate in state-approved apprenticeship programs and pay for construction workers and dependents’ health care costs. These labor standards can be enforced by underpaid workers, joint labor management cooperation committees, and the California Labor Commissioner. The labor standards are borrowed from last year’s AB 2011 and are intended to ensure that construction workers can afford to live in the communities in which they work and that California has the highly skilled workforce it needs to build future projects. Second, SB 423 removes SB 35’s coastal zone exemption, allowing affordable housing to be built in California’s coastal as well as inland communities. Finally, SB 423 extends the sunset of SB 35 from 2025 to 2036.
SB 4, colloquially known as Yes in God’s Backyard (“YIGBY”), allows religious institutions and non-profit colleges to build affordable housing development projects on their properties “by right.” As with SB 423, this means that qualifying projects benefit from a streamlined, approval process that avoids CEQA and local zoning regulations that have historically created barriers to development of new working-class housing in the state. To qualify, the projects must comply with the same labor standards in SB 423: all projects over 10 units must pay construction workers prevailing wages and all projects over 49 units must additionally participate in state-approved apprenticeship programs and pay for health care for construction workers and their dependents. The religious institution or non-profit college must also agree to maintain the affordability of the housing units to households below 80 percent of area median income for at least 55 years for rental units and 45 years for units for purchase. UC Berkeley’s Terner Center has estimated that approximately 171,000 acres of land throughout the state will be eligible for affordable housing development under SB 4.
Both SB 423 and SB 4 take effect on January 1, 2024. Read more about both laws here.
For more information regarding these and other new laws, please contact your labor law counsel.
By Matt Gauger and Andrea Matsuoka