Reforms Spur Faster Housing Approvals in California

Overview

Procedural hurdles can slow housing development and add costs because builders must pay for more staff, attorney, and consultant time, as well as interest on borrowed money, while they wait for local governments to approve proposals. These additional costs ultimately are passed on to buyers and renters, contributing to higher housing prices in markets with restrictive zoning and lengthy permitting processes, compared with places that have more flexible regulations.¹

One study from California found that more than 80% of proposed multifamily housing developments required “entitlement,” the process for securing all necessary government approvals for a construction proposal.² The research also showed that the entitlement process for similar housing developments can vary widely across jurisdictions. For example, a multifamily development in Oakland takes a median of six months, compared with more than 25 months in San Francisco. To address these disparities in entitlement timelines, spur housing production in more communities, and make affordable housing development a faster, less costly, and more predictable process, California lawmakers in 2017 passed S.B. 35.³

A 2023 study published by New York University’s Furman Center and sponsored by The Pew Charitable Trusts, suggests that S.B. 35 is helping to speed up affordable housing approvals.⁴ The findings indicate that well-designed efforts to speed up permitting processes can be effective, offering lessons for policymakers throughout the country who are interested in addressing the slow pace and high costs of housing development. And although the 2023 study focused only on the California law, other states are also increasingly passing legislation to remove barriers to housing development, such as eliminating unnecessary environmental studies; allowing builders to have their permit applications reviewed and approved by third parties when jurisdictions fail to complete reviews promptly; limiting the reasons for denial of permit requests; and requiring clear, predictable processes for reviewing permit applications.

Research also shows that Americans overwhelmingly support such policies. In a nationally representative 2023 Pew survey of more than 5,000 American adults about various law changes designed to improve the availability and affordability of housing, 86% of respondents favored requiring “local governments to use a quick and clear process for making decisions about building permits.”⁵ In California, which because of S.B. 35 arguably has the most experience with such a law, 87% were in favor.⁶

S.B. 35 requires faster permitting in targeted areas

California enacted its Housing Element Law, also referred to as the state’s “fair-share” housing law, in 1969 to ensure that each locality plans and zones for a sufficient amount of housing for people at all income levels, as determined through the state’s Regional Housing Needs Assessment (RHNA).⁷ Under RHNA, cities and counties are required to update the housing elements of their general plans every five or eight years. And the Housing Element Law gives the California Department of Housing and Community Development enforcement authority to bring communities into compliance with their obligations under the Housing Element Law.

Despite this legal framework, California communities have routinely failed to produce sufficient housing.⁸ One contributing factor is that some cities have imposed significant procedural obstacles that block or slow the construction of new housing even in places where zoning rules provide plenty of land for high-density housing.⁹ Common barriers include locally imposed conditions for approval of proposed developments, such as discretionary architecture, site development, and historic preservation reviews, as well as lawsuits brought to obstruct construction of new housing.¹⁰ Researchers have even demonstrated that litigators successfully invoked California’s Environmental Quality Act to impede housing projects in vacant or underutilized areas near transit that expressly aligned with the state’s environmental and climate policy goals.

S.B. 35 aims to promote affordable housing development, prevent displacement, and protect environmentally sensitive areas. It streamlines local discretionary and state-mandated environmental review processes in cities and counties that have not met their production targets under the Housing Element Law for housing projects that:¹¹

• Are urban, multifamily developments that meet specific affordability thresholds.
• Do not involve the demolition of affordable or tenant-occupied housing.
• Do not require subdivision (unless certain criteria are met).
• Are not proposed for environmentally sensitive or significant areas.
• Pay union-level wages for contractors and subcontractors.

S.B. 35 is speeding up housing approvals in some cities

The researchers examined S.B. 35’s impact on five jurisdictions: Berkeley, Los Angeles, Los Angeles County, Oakland, and San Francisco. The Furman Center analysis also reviewed how officials in these localities explain the law to developers and how existing local laws affected S.B. 35’s implementation in each community.

In total, the researchers identified 49 proposed developments that could benefit from S.B. 35 and compared them with similar developments entitled from 2014 to 2017 in those same jurisdictions that probably would have met key S.B. 35 requirements had the law been in place at the time. The findings showed that housing developments moved more quickly under S.B. 35 than they had previously in three of the jurisdictions—Los Angeles, San Francisco, and Berkeley.

For example, in Los Angeles, the median approval time for 18 S.B. 35-qualified developments, including 16 that were 100% affordable housing, was 2.7 months, compared with approximately seven months for 11 earlier developments that probably would have qualified for the law had it existed. San Francisco approved 10 developments—nine that were 100% affordable and one group housing property with approximately half of the units below market rate—after S.B. 35 implementation. For nine of these developments, the median time to approval was about four months; no data was available for the 10th property. From 2014 to 2017, the city approved only one similar project, and that approval took more than a year. The results for Los Angeles County and Oakland were unclear because of limited information for certain proposals.

Recent evidence indicates that procedural rules continue to pose challenges. An audit published in 2023 by California’s Department of Housing and Community Development found that, even with the advent of S.B. 35, San Francisco still takes more than three years on average to approve new housing, the longest timeline of any jurisdiction in California.

Other states are crafting bipartisan policies to allow more homebuilding

Although the Furman Center study focused on California’s S.B. 35, other states, including Montana, Tennessee, Texas, Vermont, and Washington, have passed laws in recent years to speed up the development process and address the shortage and high costs of housing. (See Table 1.)

In 2023, Montana policymakers enacted four laws to streamline and accelerate the development review process. S.B. 407 prohibits municipalities from requiring review by external boards as part of local design review, except for structures and places designated as historic. S.B. 131 requires municipalities to review land division applications within 20 working days of receipt, and S.B. 240 and S.B. 170 establish new exemptions for certain subdivisions.

Policymakers in Texas took a different approach, enacting a law in 2023 that allows permit applicants to use certain third-party reviewers and inspectors if local governments do not respond to applications promptly. Tennessee went a step further in 2024 by allowing builders to choose whether to have the locality or an accredited third-party professional conduct certain reviews and inspections. These examples show the range of strategies that state policymakers are using to help create more homes and address housing shortages and high costs.

Table 1

Over the Past 7 Years, at Least 10 States Have Passed Laws to Simplify Permitting

Summary of relevant streamlining legislation, by state, 2017-24

Source: State legislatures' websites

Lessons learned

The early evidence from California’s experience implementing S.B. 35 highlights several lessons:

• The reduction of procedural hurdles appears to be speeding up approvals for qualifying developments in several jurisdictions, but the effects are limited to areas that are already zoned for multifamily, affordable housing development. In 2023, California lawmakers passed S.B. 423 to extend the provisions of S.B. 35 for 10 years, through Jan. 1, 2036, and to more types of housing. Researchers should continue to track the impact of S.B. 35 and S.B. 423 on the speed and cost of development over time, and any subsequent effects on buyers and renters.
• S.B. 35 offers a clear review and approval process for affordable housing in jurisdictions where complex local rules and frequent opposition have impeded new development. This predictability can help to boost housing supply by removing obstacles for builders who are committed to creating homes for lower-income households.
• Procedural reforms can be crafted to guard and promote other statewide priorities. For example, policymakers can carefully select the criteria by which proposed developments can be eligible for a streamlined process to ensure that concerns such as environmental protection and fair wages are not sacrificed when new housing is built.
• State laws are unlikely to fully standardize the housing approval process across jurisdictions because other local rules already in place affect how each locality implements the law. The researchers found that each of the five jurisdictions studied implemented S.B. 35 differently, resulting in divergent experiences for builders in terms of the ease and efficiency of the process.
• Faster approval times increase the supply of housing and reduce the cost of development, both of which help boost affordability. For example, Minneapolis enacted a range of zoning reforms from 2009 through 2021 and restricts application reviews to 60 days to help expedite permitting. As a result, the city has added so much new housing that rents have risen less than 1% per year dating back to 2017, even as residents’ incomes have risen far faster. The combination of higher incomes and very low rent growth has markedly improved housing affordability in the city. Normally, flat rents might discourage new construction because they lower landlords’ future revenue expectations, but because permitting has become easier and faster, builders have continued adding housing.¹²

Conclusion

New research shows promising evidence that California’s S.B. 35 is having the intended effect of speeding up the pace of affordable housing approvals. Since the law’s passage, several other states have implemented laws to reduce procedural hurdles to development through a range of approaches and in a diversity of geographic and political contexts. Together, the findings from California and the demonstrated momentum to enact similar approaches in other states show that streamlining housing development is an issue with bipartisan appeal that has the potential to ensure a greater supply of housing at lower costs.

Acknowledgments

This brief was written by Pew staff members Ruth Lindberg and Alex Horowitz and was based on original research by Moira O’Neill, associate research scientist and affiliated scholar, the University of California, Berkeley, and associate professor of urban and environmental planning and associate professor of law, the University of Virginia, and Ivy Wang, graduate student researcher, Institute of Urban and Regional Development, University of California, Berkeley. The project thanks Esther Berg, Jennifer V. Doctors, Carol Hutchinson, and Chelsie Pennello for providing important communications, creative, editorial, and research support for this work.

Endnotes

1. Edward Glaeser and Joseph Gyourko, “The Economic Implications of Housing Supply,” Journal of Economic Perspectives 32, no. 1 (2018): 3-30, https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.32.1.3.
2. Moira O’Neill et al., “Examining Entitlement in California to Inform Policy and Process: Advancing Social Equity in Housing Development Patterns,” California Air Resources Board and California Environmental Protection Agency, 2022, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3956250. Moira O’Neill and Ivy Wang, “How Can Procedural Reform Support Fair Share Housing Production? Assessing the Effects of California's Senate Bill 35,” New York University Furman Center, https://furmancenter.org/files/How_Can_Procedural_Reform_Support_Fair_Share_Housing_Production_508.pdf.
3. Office of Senator Scott Wiener, “Senate Bill 35—Housing for a Growing California: Housing Accountability & Affordability Act,” https://sd11.senate.ca.gov/sites/sd11.senate.ca.gov/files/SB%2035%20Fact%20Sheet_1.pdf.
4. Moira O’Neill and Ivy Wang, “How Can Procedural Reform Support Fair Share Housing Production?”
5. “Survey Finds Large Majorities Favor Policies to Enable More Housing,” Alex Horowitz and Tushar Kansal, The Pew Charitable Trusts, Nov. 30, 2023, https://www.pewtrusts.org/en/research-and-analysis/articles/2023/11/30/survey-finds-large-majorities-favor-policies-to-enable-more-housing.
6. “Support for Policies That Promote More Housing Crosses Geographic Lines,” Alex Horowitz and Tushar Kansal, The Pew Charitable Trusts, Jan. 31, 2024, https://www.pewtrusts.org/en/research-and-analysis/articles/2024/01/31/support-for-policies-that-promote-more-housing-crosses-geographic-lines.
7. Paul G. Lewis, “California’s Housing Element Law: The Issue of Local Noncompliance,” Public Policy Institute of California, 2003, https://www.ppic.org/wp-content/uploads/content/pubs/report/R_203PLR.pdf.
8. Paul G. Lewis, “Can State Review of Local Planning Increase Housing Production?,” Housing Policy Debate 16, no. 2 (2010): 173-200, https://www.tandfonline.com/doi/abs/10.1080/10511482.2005.9521539. Moira O’Neill and Ivy Wang, “How Can Procedural Reform Support Fair Share Housing Production?”
9. Paavo Monkkonen, Michael Manville, and Spike Friedman, “A Flawed Law: Reforming California’s Housing Element,” UCLA Lewis Center for Regional Policy Studies, 2019, https://www.lewis.ucla.edu/research/flawed-law-reforming-california-housing-element/. Moira O’Neill, Giulia Gualco-Nelson, and Eric Biber, “Examining the Local Land Use Entitlement Process in California to Inform Policy and Process: Working Paper #2,” Berkeley Law Center for Law, Energy, and the Environment; Berkeley Institute of Urban and Regional Development; and Graduate School of Architecture, Planning, and Preservation, Columbia University, 2019, https://www.law.berkeley.edu/wp-content/uploads/2019/02/Examining-the-Local-Land-Use-Entitlement-Process-in-California.pdf.
10. Jennifer Hernandez, “California Environmental Quality Act Lawsuits and California’s Housing Crisis,” Hastings Environmental Law Journal 24, no. 1 (2018): https://repository.uclawsf.edu/cgi/viewcontent.cgi?article=1032&context=hastings_environmental_law_journal.
11. California Government Code, Section 65913.4(a), https://casetext.com/statute/california-codes/california-government-code/title-7-planning-and-land-use/division-1-planning-and-zoning/chapter-42-housing-development-approvals/section-659134-effective-until-112036-streamlined-approval-process. Office of Senator Scott Wiener, “Senate Bill 35—Housing for a Growing California.”
12. “Minneapolis Land Use Reforms Offer a Blueprint for Housing Affordability,” Alex Horowitz, Linlin Liang, and Adam Staveski, The Pew Charitable Trusts, Jan. 4 , 2024, https://www.pewtrusts.org/en/research-and-analysis/articles/2024/01/04/minneapolis-land-use-reforms-offer-a-blueprint-for-housing-affordability.