A New Bill Would Extend California's YIMBY Revolution to Heavily Regulated Coastal Areas

S.B. 423 would prevent the state's powerful Coastal Commission from shooting down affordable housing projects that comply with local zoning laws.

Over the past half-decade, the California Legislature has passed dozens of reforms aimed at increasing housing supply and streamlining its production.

Some of these reforms have been more productive than others. A few have been runaway successes, while a couple of others have been counterproductive flops. One thing they all have in common is that they don't apply to the 1.5 million–acre "coastal zone."

Instead, building in this zone remains controlled by the California Coastal Commission (CCC), a 12-member body with wide discretion to approve, deny, or condition local regulations of coastal development and individual projects.

So, while the trend of state law has been to remove bureaucrats' discretion over development, the CCC has largely retained its ability to say no to new housing along the coast.

"The more layers of review you have, and the more discretion agencies have in that decision-making process, the more reasons they can deny a development permit to a landowner," says Jeremy Talcott, an attorney with the Pacific Legal Foundation.

Potentially breaking that mold is S.B. 423, a pending bill in the Legislature that would expand existing state streamlining law to the coastal zone for the first time.

The bill is an extension and expansion of S.B. 35, a 2017 law that requires local governments behind on state-set affordable housing goals to "ministerially approve" projects that comply with local zoning laws.

Ministerial approval means that city bureaucrats can't subject projects to endless environmental reviews, require them to get special permits, or condition their approval on things that aren't already spelled out in local regulations.

Requiring local governments to approve new housing that complies with local government regulations has proven to be a significant improvement in the regulatory environment.

Researchers with the University of California, Berkeley Terner Center for Housing Innovation estimate that S.B. 35 has been used to entitle 18,000 units of mostly subsidized, affordable housing between 2018 and 2021.

The law does streamline approvals for mixed-income and market-rate developments as well. But the requirement that developers using S.B. 35 streamlining pay prevailing (union) wages—which can raise construction costs by 10 percent or more—has seen few market-rate developers take advantage of the law.

Most of the projects using S.B. 35 have been 100 percent affordable projects, which already had prevailing wage requirements. The Terner Center does say the law has become "the streamlining method of choice among affordable housing developers."

But by exempting the state's coastal zone, S.B. 35 has left coastal developers with the need to get CCC signoff for their projects.

Opponents can also appeal the local approval of new affordable housing in the coastal zone up to the Commission as well. This extra layer of review can add significant delays to projects that have already been extensively vetted by local officials.

Witness the timeline for the Venice Dell Community project, which aims to replace a city-owned parking lot in the Venice Beach area of Los Angeles with 140 units of affordable housing.

The process of adding housing to the site started all the way back in 2016. After a dozen public hearings, the project received final approval from the city of Los Angeles in summer 2022. Because it's in the coastal zone, the project's sponsors had to get the CCC's signoff as well. Shortly after the city's approval came down last year, the commission voted to delay consideration of the project until November 2023.

For pro-supply housing advocates, continuing to exempt rich coastal communities from streamlining that applies to the rest of the state is untenable.

"Santa Cruz does need streamlining and Venice Beach does need streamlining. These places have all the amenities. Good schools, close to grocery stores, good healthcare, and you're saying no one else gets to live there," says Matthew Lewis of California YIMBY, which supports S.B. 423.

The CCC itself has fought against extending S.B. 423's streamlining provisions to its jurisdiction, arguing its mandate of protecting access to the state's coastal lands would be irreparably damaged.

"Once you start exempting classes of development from the Coastal Act there will be no shutting that barn door," Sarah Christie, a lobbyist for the Commission, told CalMatters last month. "You're going to lose some of the best things about California."

It does appear that the Commission and proponents of S.B. 423 are coming closer to an agreement.

The bill has already passed the state Senate. It also survived a tough vote in the Assembly's Natural Resources Committee over the opposition of that committee's chairperson and the Coastal Commission, who testified against it.

On Monday, state Sen. Scott Wiener (D–San Francisco), the author of S.B. 423, inserted amendments into his bill that would exempt coastal land closest to the beach from the bill's streamlining provisions. More amendments exempting coastal areas vulnerable to up to five feet of sea level rise are expected to be added in the coming weeks.

These amendments are expected to get the Commission to drop its opposition to the bill.

Prior to those amendments, S.B. 423 was expected to open up about 270,000 acres of land in the coastal zone, once all the preexisting exemptions were considered. Legislative staff working on S.B. 423 say the most recent and forthcoming amendments will exempt about 30,000 acres of coastal land from the bill's streamlining provisions.

S.B. 423 still needs to pass the Assembly's Appropriations Committee and the Assembly as a whole. The latest amendments will require it to receive another vote in the Senate. The bill is facing a mid-October deadline to be signed by the governor.

The bill is hardly a free marketer's dream, given its primary purpose of streamlining subsidized development.

The units unlocked by S.B. 35 nevertheless show how much of a roadblock the discretionary approval process has become to new housing supply. Expanding its provisions to prime coastal real estate will be another proof of concept that getting rid of this discretionary review will lead to more housing being built.