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Home My WebLink About05 - May 15, 2026 - The New Landscape of Housing Law in California 01276.0002 2134177.2 1 CITY ATTORNEY’S OFFICE CITY HALL 10300 TORRE AVENUE • CUPERTINO, CA 95014-3255 TELEPHONE: (408) 777-3403 • CUPERTINO.GOV CITY COUNCIL INFORMATIONAL MEMORANDUM May 15, 2026 To: Cupertino City Council From: Floy Andrews, Interim City Attorney and John Cardenas, Special Counsel Re: The New Landscape of Housing Law in California Summary: In recent years the State Legislature has adopted an aggressive suite of statutory overrides that strip away municipal control over housing development. This informational memo is intended to provide an overview of those new housing laws, adopted between 2019 and 2025, and the penalties for failing to comply with the new laws. 1. What is Changing? For decades, local city councils held near-absolute, discretionary authority over building proposals within their municipality. Councils routinely weighed resident concerns, assessed neighborhood aesthetics, and considered whether a proposed project aligned with the local community character. The legal framework has now shifted from such local discretion to state-mandated production, forcing cities to prioritize the building of more units quickly and providing greater affordable housing units to moderate and low income households. The structural shift moves the state away from local discretion and into the realm of state-mandated approval. 2. What does "Ministerial Approval" mean? Ministerial approval is a non-discretionary process that fundamentally alters how housing developments are vetted. Historically, cities held "discretionary review" over housing projects in their jurisdiction, allowing officials to more readily deny project permits they believed were not in the best interests of the public or community. Under the new state mandates, the approval process, in many cases, functions more like that for obtaining a standard driver's 01276.0002 2134177.2 2 license: if a developer submits an application fulfilling a rigid checklist of objective state standards, the city must issue the permit. Key impacts of this change include: • Elimination of CEQA review: In many instances projects can bypass the environmental review process of the California Environmental Quality Act. • Bypass Local Opposition: Neighborhood pushback is legally neutralized if the builder hits the state-dictated objective metrics. • Predictable Timelines: Developers gain financial certainty because approvals rely on objective rules rather than local discretion. 3. What Happens if the City Doesn't Follow the Rules? The state has implemented strict legal mechanisms and financial penalties to ensure municipal compliance with the new laws. If a city attempts to block, delay, or down-zone a housing project that meets objective state criteria, the city faces swift legal and administrative consequences. A. The "Builder’s Remedy" Every municipality in California must maintain a certified Housing Element, a highly detailed, state-approved master plan demonstrating exactly where and how the city will accommodate its fair share of the regional housing need. If a city fails to secure certification for its Housing Element from the state Housing and Community Development (HCD) department on time, or if their plan is deemed non-compliant, the city instantly enters a state of non-compliance. In this state, local governments forfeit nearly all authority over their own municipal zoning maps. Developers can use the Builder's Remedy to propose projects of virtually any height, size, or density, completely ignoring the city’s local general plan or zoning restrictions. • Affordable Housing Threshold: To use this loophole, the developer must dedicate at least 20% of the project's units to lower-income households, or 100% to moderate-income households. • Loss of Veto Power: The city cannot deny the project based on local zoning inconsistencies, density limits, or height maximums. • State Updates: Recent updates under SB 158 and AB 1893 standardize the Builder's Remedy, protecting developers from municipal retaliation and shortening review windows for non-compliant cities. B. Fines and Legal Liability Denying an eligible housing project in "bad faith" or failing to process applications according to state timelines has become an expensive liability for local taxpayers. The state has escalated the financial penalties to force cities into compliance. 01276.0002 2134177.2 3 Under the Housing Accountability Act (HAA), if a court finds that a city illegally denied or reduced the density of an affordable housing project without documented public health or safety threats, the court can issue severe financial penalties. • Baseline Fines: Minimum fines start at $10,000 per housing unit in the proposed development. • Bad Faith Multipliers: If a city acts in bad faith by falsifying records or intentionally stalling, the court can multiply the fine by five, raising the cost to $50,000 per housing unit. For a 100-unit complex, this can result in a $5 million penalty. To prevent cities from tying up projects in court for years, the legislature passed Senate Bill 1037, which targets ongoing municipal non-compliance. The law gives the State Attorney General the authority to seek immediate court-ordered penalties against cities that violate state housing laws. Non-compliant cities can face continuous fines of up to $50,000 per month for every single violation of state housing law until they fully comply. These fines are paid out of the city's general fund, diverting local taxpayer dollars away from parks, roads, and public safety. 4. The Housing Crisis Act (SB 330 The Housing Crisis Act of 2019, widely known as Senate Bill 330, prevents cities from relying on local ordinances to disapprove housing applications. Now, when a builder submits a basic "preliminary application," all local zoning laws, design criteria, subdivision standards, and development fees are frozen, preventing a city council from enacting new anti-growth ordinances to restrict the project, or increase development impact fees. SB 330 aggressively curtails municipal discretion in the following ways: • Meeting Caps: Municipalities may not conduct more than five public meetings to review a conforming project. • Mandatory Timelines: Cities must approve or deny a complete application within 90 days of EIR certification, or 60 days for affordable projects. • Anti-Downzoning Clauses: Cities cannot reduce the net housing capacity or density of a parcel below what was allowed on January 1, 2020 5. More Homes in Single-Family Neighborhoods A. Splitting Lots and Adding Units (SB 9) For nearly a century, single-family zoning restricted residential neighborhoods to just one primary house per parcel. The passage of Senate Bill 9, known as the "California Home 01276.0002 2134177.2 4 Ownership Alternative and Housing Choice Opportunity for All (HOME) Act," systematically dismantled this structure. In qualifying single-family residential zones, property owners and real estate developers now possess the following rights to modify land use without local veto power so long as they occupy one of the units for at least three years: • Lot Splits: A single residential lot can be legally subdivided into two separate parcels, provided each new lot is at least 1,200 square feet. • Unit Duplication: Owners can construct up to two distinct residential units on each of those newly created parcels. Local municipalities cannot enforce subjective architectural guidelines, require lengthy environmental impact reports, or Subject SB 9 proposals to public discretionary votes. Cities may only enforce objective metrics, such as strict setbacks (typically restricted to a maximum of 4 feet for side and rear yards) and universal height limitations. Municipalities cannot mandate off-street parking spaces if the development sits within one-half mile of a high-quality transit corridor or a major transit stop. If the architectural blueprint aligns precisely with the objective local checklist, the city must approve the subdivision and construction permits ministerially. B. Building on Commercial Land (AB 2011) Suburban commercial sectors are filled with underutilized economic space. Assembly Bill 2011 (the Affordable Housing and High Road Jobs Act) unlocks these areas for residential conversion by right. State law completely bypasses local commercial zoning designations, allowing developers to build multi-family residential housing on parcels previously restricted to retail, office, or parking uses. • Zoning Override: The law permits apartment buildings or condominiums to be built within commercial zones without requiring a general plan amendment or a local re- zoning vote. In using this law, the developer must pay prevailing wages and utilize apprenticeship programs. Projects utilizing AB 2011 bypass the lengthy traditional municipal approval process, environmental lawsuits, and city council debates through an expedited ministerial pathway. To unlock the fastest approval tracks, projects must dedicate 100% of their units to lower-income households, or mixed-income projects must dedicate at least 15% of units to low-income residents. The property must front a "commercial corridor," defined generally as a roadway with a right-of-way of at least 50 feet that is heavily utilized by local traffic. Because the approval mechanism is strictly ministerial, these massive commercial-to-residential conversions are entirely exempt from California Environmental Quality Act review. The law also grants developers significant density allowances and height maximums, overriding restrictive local ordinances. 6. Removing the Process Delays of Environmental Reviews 01276.0002 2134177.2 5 A. Understanding CEQA The California Environmental Quality Act (CEQA) requires public agencies to analyze, disclose, and mitigate the environmental impacts of discretionary development decisions. Complying with CEQA can be costly and time consuming. B. The New Fast-Track Rules (SB 131) The California Legislature adopted Senate Bill 131 alongside Assembly Bill 130. These budget trailer bills enacted comprehensive structural revisions to the state's environmental review framework. The defining breakthrough of SB 131 is the Single-Condition Limitation, colloquially known as the "near-miss" rule. Previously, if a housing development met 99% of the criteria for an official environmental exemption but missed a single technical metric, the entire exemption failed. The project was then required to undergo a full CEQA review. Under the statutory mandate of SB 131, this "one-strike" vulnerability is eliminated: • Narrowed Review: If a project satisfies an exemption but fails a single condition, the city's CEQA analysis is strictly confined to the environmental effects caused solely by that single disqualifying factor. • Protected Components: The lead municipal agency is legally barred from reviewing or litigating any other aspects of the housing project. • Broad Application: This protection shields projects trying to utilize standard categorical exemptions, including existing facilities expansions, replacement structures, or minor land divisions. Historically, when a city rezoned a neighborhood to allow denser housing, the city performed an environmental review for the macro-level rezoning plan. Despite that initial review, individual developers who later proposed apartment buildings on those specific parcels were frequently forced to undertake additional environmental studies for their specific plots. SB 131 streamlined the override to eliminate this step: • Housing Element Exemption: Local governments are granted a comprehensive statutory CEQA exemption for rezoning actions specifically executed to implement an approved local Housing Element. • Individual Project Immunity: Once the macro-level environmental analysis is completed during the master rezoning phase, individual infill developments that align with that new zoning can move forward without repeating the core environmental review process. SB 158 further constricts cities by reducing review footprints and extending compliance fines. 01276.0002 2134177.2 6 _____________________________________ Prepared by: John Cardenas, Special Counsel Reviewed by: Floy Andrews, Interim City Attorney Approved for Submission by: Tina Kapoor, City Manager