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Building Houses on Commercial Land Just Got Easier in California

California is widely known for not having enough places for people to live. One tactic that California lawmakers have weighed to address the state’s housing shortage is to open up commercial land for residential construction. Yesterday, lawmakers reached a deal for a pair of bills that would allow for residential development on a huge chunk of the state’s commercial land.

The Sacramento Bee reports that Sen. Anna Caballero, D-Merced, and Buffy Wicks, D-Oakland, have spent the better part of this year negotiating with carpenter and trades unions and drafting legislation that would allow new houses to be built in areas zoned for office or retail buildings. After striking a deal with unions, both lawmakers are confident that their two complimentary bills will pass with ease. Wick’s bill, Assembly Bill 2011, grants homebuilders a quick approval process that  circumnavigates zoning laws and local government approval, so long as developers ensure that their construction workers are paid a prevailing wage and and a percentage of the new homes built are affordable. Senate Bill 6, Caballero’s bill, would permit developers to construct market-rate homes on commercial land, however, these developments would be subject to the local approval process. But just like Wick’s bill, labor security is baked in by giving the first two construction bids to union members, but any non-union workers must be paid the prevailing wage. 

A deal of this magnitude, let alone two, would have been considered far-fetched just a few years ago because local officials have generally rebuffed the construction of dwellings on land set aside for commercial purposes. Why? Because businesses pay more in property taxes than residences do. So much so that many municipal governments are happy to let vacant land sit after a store closes, sometimes for decades, in the hopes that another retailer will take its place. But after the pandemic pushed business online and propelled the work-from-home trend, making it less likely for empty shops and offices to be snatched up, the idea of building housing on commercial land was cast in a more favorable light.

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