SB2 is the first permanent source of state funding dedicated to helping local governments increase housing production. The program is funded by fees levied on certain real estate transactions and is expected to generate between $250 and $300 million annually. The California Department of Housing and Community Development (HCD) is administering the program. The revenues generated for the first year of funding will be split between homelessness programs and planning grants.
Local governments will be eligible to apply for planning grants (anticipated in March 2019) that can be used on a range of qualifying activities related to streamlining and accelerating housing production. Eligible activities include updates to general and specific plans, updates to zoning ordinances, and process improvements that expedite planning approval for housing development. Jurisdictions will have eight months anticipated to begin in March to apply for and receive SB2 funding.
SB2 planning grants are non-competitive and a jurisdiction’s maximum award is based on population size, as determined by the California Department of Finance. The minimum award amount is $25,000.
- Smaller localities (60,000 or less): $125,000 Maximum
- Medium localities (60,000–200,000): $250,000 Maximum
- Large localities (greater than 200,000): $500,000 Maximum
To qualify for SB2 funding, a jurisdiction must meet the following threshold requirements (specific details to be provided in the Notice of Funding Availability (NOFA)):
- A compliant Housing Element
- Submission of Annual Progress Report (APR)
- Document that demonstrates nexus of fund utilization to housing production
- Document that demonstrates locality is consistent with State Planning and Other Priorities
Priority Policy Areas
HCD has preliminarily identified five Priority Policy Areas* that ease access and reporting, and have various other benefits in the SB2 Planning Grants program. For example, Priority Policy Areas automatically demonstrate nexus to housing production and no documentation is needed. The program’s Technical Assistance will also focus on the Priority Policy Areas. Priority Policy Areas include:
- Rezone to Permit By-right: Rezoning for additional housing capacity without or lesser discretionary review or establishing zoning to permit residential development by-right, particularly multifamily, without discretionary action.
- Objective design and development standards: Developing objective design standards or pre-approved site and architectural plans that facilitate non-discretionary permitting.
- Specific plans or Form Codes coupled with CEQA streamlining: Designating and rezoning for additional housing capacity or preparing specific plans or form codes that include zoning and development standards and plan-level environmental analysis that can be used to streamline future housing projects and facilitate affordability.
- Accessory Dwelling Units and other innovative building strategies: Encouraging ADUs and other innovative building types through ordinances, outreach, fee waivers, pre-approved plans, website zoning clearance assistance, and other homeowner tools or finance tools.
- Expedited processing: Speeding up approvals and permit processing, including instituting programs that streamline or consolidate the review process or create a separate process for expedited review of housing projects.
ABAG/MTC is encouraging jurisdictions to pool their SB2 resources together for joint projects of regional importance. ABAG/MTC staff are prepared to assist Bay Area jurisdictions to develop ideas and coordinate partnerships ahead of the March release of the applications. During our engagement with planning directors and staff across the region, we have identified three key activities that local governments could pursue with their SB2 resources:
- Housing Element Pre-work and Analysis: Recent legislation (AB879 and AB1397) increased scrutiny of Housing Element sites and introduced limits on whether sites can be carried over from one RHNA cycle to the next to meet lower-income need. With only 7% of sites from the previous RHNA cycle available for reuse in the upcoming RHNA with no changes, local jurisdictions will need to identify new sites and/or re-zone previously used sites for by-right development at default densities to meet the needs identified in the upcoming RHNA cycle. Jurisdictions are encouraged to use SB2 funds to identify and re-zone sites to allow multi-family housing by-right and facilitate meeting future housing element requirements.
- Implementation of ADU Calculator: A tailored ADU calculator is a good example of a low-cost, high-impact SB2 project if enough jurisdictions agree to pitch in and share the cost of developing the tool. ABAG/MTC staff have experience deploying countywide ADU calculators and are ready to assist similar collaborative efforts.
- Objective Design Standards: Since passage of SB35, cities have been struggling to implement objective development standards, the most challenging being design standards. ABAG/MTC staff is interested in supporting jurisdictions in developing form-based code design guidelines that can be shared among jurisdictions and customized to a particular neighborhood or housing type.
ABAG/MTC housing staff are seeking to assist jurisdictions generate ideas and facilitate collaboration ahead of the March release of the applications. Please contact Ada Chan, ABAG/MTC Regional Planner or Darryle Ulama, HCD Fellow with ABAG/MTC for more information or to seek opportunities to partner with other jurisdictions.
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