News   /   August 5, 2022   /   

California Senate Bill 197 Extends Key Housing Element Rezoning Deadlines, Expands Funding Opportunities

On June 30, 2022, Governor Gavin Newsom signed Senate Bill (SB) 197, which grants local jurisdictions in California with housing element due dates in 2021 additional time to complete any necessary rezoning. SB 197 also addresses the state’s housing crisis with nearly $5 billion in funding allocated for housing and homelessness investments. The bill, which took effect immediately as part of the 2022-2023 budget package, gives relief to cities struggling to comply with the initial window to approve zoning code amendments and adopt a housing element.

Additional Time to Complete Housing Element Required Rezones

Previously, local jurisdictions that failed to adopt a housing element found by the Department of Housing and Community Development (HCD) to be in compliance with Housing Element Law within 120-days from the statutory deadline for housing element adoption were required to complete any necessary zoning code amendments within one year of the statutory deadline.

SB 197 amends the timeline by granting local governments three (3) years (instead of one (1) year) and 120 days from the statutory deadline for adoption of the housing element to complete any necessary rezoning of sites if all of the following apply:[1]

  1. The statutory deadline for adoption of the 6th revision of the housing element was in the 2021 calendar year,
  2. The local government failed to adopt a housing element that HCD found to be in substantial compliance with specified requirements, and
  3. The local government adopts its 6th revision of the housing element that HCD finds to be in substantial compliance within one year of the applicable statutory deadline.

Thus, local governments with 2021 housing element deadlines now have a three-year rezoning deadline if their adopted housing element is certified by HCD by October 15, 2022 (meaning HCD has issued a review letter finding the housing element in compliance with Housing Element Law).

In some circumstances, SB 197 also enables HCD to grant a one-year extension for completing the required rezoning if the local government has completed at least 75% of its accommodations for low- and very low-income households.

Expanded Funding Opportunities for Housing and Homelessness Programs

SB 197 reflects continuing efforts to develop solutions that address California’s housing crisis by providing additional funding to address homelessness in areas such as extending the long-term affordability of government-funded housing projects, expanding the definition of entities authorized to receive funds for housing needs, and expanding the purposes for which loans or grants may be made. Key changes are outlined below.

  • California Interagency Council on Homelessness (Previously the Homeless Coordinating and Financing Council): SB 197 requires additional funding round moneys appropriated for the Encampment Resolution Funding program in or after the 2021–22 fiscal year to be awarded for specified purposes, including first used for projects from prior funding rounds that satisfied applicable program requirements but were not funded in the prior round, and next to fund new grants on a rolling basis. New grant recipients will be required to expend funding within certain deadlines.
  • Local Government Planning Support Grants Program: SB 197 amends existing law to require each recipient of funds under the Local Government Planning Support Grants Program to expend those funds no later than December 31, 2024, and requires each recipient of funds to submit a final report on the use of the funds to HCD no later than December 31, 2025.
  • Housing Rehabilitation Loan Fund: SB 197 authorizes loans or grants to HCD-funded housing projects with an affordability restriction that has a remaining term of less than 10 years (previously 5 years). SB 197 authorizes HCD to charge a monitoring fee in lieu of required loan payments for a portion of a project and for the purposes of the default reserve. SB 107 requires the in-lieu payments to be deposited into the Housing Rehabilitation Loan Fund for preservation of affordable housing.
  • Excess Sites Local Government Matching Grants Program: SB 197 expands the definition of “local agency” to include joint powers authorities, and other authorities and expands predevelopment costs to include environmental remediation and other activities. Additionally, SB 197 allows the program contribution to a selected developer to exceed the existing limit of $10,000,000 when certain conditions are met.
  • Mobile Home Park Rehabilitation and Purchase Fund: SB 197 renames the Mobile Home Park Rehabilitation and Resident Ownership Program the Manufactured Housing Opportunity and Revitalization (MORE) Program, and authorizes HCD to make loans or grants, as applicable, for the additional purposes of reconstruction and replacement of a mobile home park.
  • Infill Infrastructure Grant Program of 2019: SB 197 recasts the provisions of the Infill Infrastructure Grant Program of 2019, expanding permitted grants to include the creation, development, and rehabilitation of parks, bike transit facilities, and traffic mitigation. SB 197 also expands the definition of eligible applicant to include specified governing bodies of Indian reservations or rancherias and tribally designated housing entities.
  • HOME Investment Partnerships Act: The federal HOME Investment Partnerships Act allocates funds to states and local governments to expand the supply of affordable housing. SB 197 authorizes HCD to adopt guidelines, rules, policies, or standards of general application to implement its allocation of HOME funds, the provision of technical assistance, and coordination of HOME activities.
  • California Dream for All Program: SB 197 establishes the California Dream for All Program to provide shared appreciation loans to qualified first-time homebuyers. Assistance is limited to low- and moderate-income homebuyers in the purchase of owner-occupied homes. Assistance is required to be made available only at the time of the first mortgage loan financing provided by the agency.

Complying with SB 197

Cities should be mindful of statutory review timelines to maintain the extended three-year deadline for rezoning afforded by SB 197. To meet the one-year deadline for adoption and review, jurisdictions will need to submit their adopted housing elements to HCD no later than August 15 to allow HCD to complete its review before October 15, 2022.[2] For assistance in complying with the new housing element deadlines or more information on the expanded opportunities for funding, contact your OMLO attorney.

This article is for informational purposes only and only provides an overview of specific developments. It is not intended to be, and should not be construed as, legal advice for any particular fact situation. For actual legal advice and specifics pertaining to your governmental entity, please contact your OMLO attorney for assistance.

[1] (Government Code Section 65583.4)

[2] (Government Code Section 65585)

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