Senate Bill 15, a measure authored Senator Anthony J. Portantino (D – La Canada) which gives incentives to cities that convert abandoned retail sites into affordable and workforce housing, passed the Senate Housing Committee today.
“Lack of affordable housing is a major issue for current and potential employers in California counties and negatively impacts our economy,” stated Senator Portantino. “Housing is fundamental to the welfare of business and the workforce population. Using abandoned retail sites for new affordable housing is an achievable and necessary goal that California must pursue.”
According to the California Department of Housing and Community Development (HCD), from 2015-2025, approximately 1.8 million new housing units are needed to meet projected population and household growth, or 180,000 new homes annually. The imbalance between supply and demand has driven California housing costs to be the highest in the nation, with an average median home price now 2.5 times the U.S.median. These high prices have prohibited occupations like teachers, nurses, public safety officers and younger professionals the ability to afford owning a home, essential for building a stronger and vibrant economy.
A concurrent trend has emerged in local economies due to the growth of e-commerce. Since 2017, national retailers have been reducing their demand for future space in retail centers, are closing stores and abandoning retail sites at a record pace greater than during the Great Recession.
SB 15 will enable local cities to receive from HCD the average of the annual amount of sales tax revenue generated by that site for the last seven years if the site has been converted and occupied with new housing. The city would receive that average amount for a total of seven years. For a local government to receive this fiscal incentive, the city must approve a housing development project through its planning process, must be built and have a certificate of occupancy for the city to be eligible, and receive the sales tax rebate. Should the city approve a mixed use development on the site, the city would be eligible for the sales tax rebate only on the amount of square footage dedicated to housing.
“There is no doubt that SB 15 is an innovative solution that gives local governments incentives to allow for building more housing in their jurisdictions, and to make real strides in increasing housing production in our state,” said Chris Wilson, Policy Manager for the Los Angeles County Business Federation. “California’s severe housing shortage needs creative and financially viable proposals to tackle this challenge.”
“We are pleased to see SB 15 move out of the Senate Housing Committee today,” stated Blanca Pacheco, President of the Los Angeles County Division of the League of California Cities. “With the state experiencing a large budget windfall, this is an ideal year for the Legislature to move SB 15 to the Governor and send a clear message that the state is committed and invested in partnering with cities to increase housing production, along with the critical infrastructure and essential services that are required to sustain vibrant communities and strong economies. SB 15 is a thoughtful proposal designed to address the hurdles to rezoning commercial sites into residential sites by creating a limited state investment to supplement the lost local revenue from converted retail space and secure sustainable city services for the new housing density,” she added.
“We are proud to support SB 15,” stated Robbie Hunter, President of the State Building and Construction Trade Council of California. “With this bill, Senator Portantino is creating housing for working families while providing jobs that pay fair wages - two things needed now more than ever as California attempts to rebound from the COVID pandemic.”
The Los Angeles County Business Federation, State Building and Construction Trade Council of California, and the Los Angeles County Division of the League of California Cities are sponsors of the bill. Supporters of the bill include: Better Way CA, California Cities for Local Control, California-Nevada Conference of Operating Engineers, Century Glen HOA, Citizens Preserving Voice, City of Claremont, City of Santa Monica, Crescenta Highlands Neighborhood Association, Hollywoodland Homeowners Association, Latino Alliance for Community Engagement, Livable California, Miracle Mile Residential Association, Pacific Palisades Community Council, Riviera Homeowners Association, Save Our Single-Family Neighborhoods, Sherman Oaks Neighborhood Association, South Bay Cities Council of Governments, Spalding Square Neighborhood Association, and Verdugo Woodlands West Homeowners Association.