CA: New Laws Allow Multifamily Residential Development on Commercial Property

CA:  New Laws Allow Multifamily Residential Development on Commercial Property

California enacted a law that takes effect on July 2023, which allows residential construction on commercially zoned property.  The law at issue is intended to allow for streamline approval of multifamily housing developments in commercial zones.  So long as 100% of the proposed multifamily units in the new development are dedicated to lower income households at an affordable cost or at an affordable rent set in an amount consistent with the rent limits established by the California Tax Credit Allocation Committee, the streamline is ministerial.  Also, where the new development abuts a commercial corridor [1]and has a frontage along the commercial corridor of a minimum of 50 feet, the project may qualify for ministerial approval.  The Commercial Corridor option requires:

  •      •For any owner-occupied project, it must have at least 30% of the units offered at an affordable housing cost to moderate income households or 15% of the units offered at an affordable housing cost to lower income households; or
  •      •For rental units, they must meet the higher of (a) the minimum inclusionary housing requirement of the city or county in which the property is located or (b) either 15% of the units reserved for lower income households, or (c) 8% of units reserved for very low-income households and 5% of units for extremely low-income households.


New projects must also meet some site-specific and project-specific criteria in order to qualify for the development, including that the property is located within a zone where office, retail, or parking are a principally permitted use; the property is in an urbanized area; and the property is located no closer than 500 feet from a freeway.  There are minimum and maximum densities, height limits, and setback requirements for projects that vary according to the project location, Commercial Corridor frontage and whether a transit stop is nearby.

An application for ministerial approval is exempt from the California Environmental Quality Act (“CEQA”) and there are quick limits for project decision making: 90 days for projects under 150 homes and 180 days for projects over 150 homes.  Local government design review must occur in this limited timeframe and be based solely on objective standards, with any decision of non-compliance to be accompanied by the objective planning standards and a written explanation within a 60-90 day timeframe from the filing of the application.

Note that these developments require payment of prevailing wages to all construction workers and, for building 50 or more units, monthly compliance reports must be submitted to the local government and the developer must make family healthcare benefit contributions for projects with qualified construction craft workers on projects of more than 50 units.

Projects using these streamlined approval processes may also be able to get reduced parking ratio requirements, density bonuses, and other incentives, waivers and reductions in development standards under California’s Density Bonus Law (Gov. Code § 65915).

Another 2022 law provides for residential development on property zoned for retail, parking and office space, even without the developer having to rezone the property for residential housing.  This law is limited to housing development projects that are either entirely for residential units or mixed use projects with at least 50% of the square footage dedicated to residential use, and the project must be located on sites of 20 acres or less in an urban area and should not be next to a site where more than a third of the square footage is dedicated to industrial use.   These projects must still satisfy the height, setback, parking and other requirements of the jurisdiction’s closest parcel that allows the authorized density.

These developments do not provide for a ministerial approval but do allow for lower minimum density requirements and no affordability requirements other than the housing requirement of the city or county in which the property is located.  The developer must notify labor unions and get two bids from contractors to ensure labor union involvement.  And prevailing wages are also required for these zoning developments.

Here at Epps & Coulson, LLP we are ready to help you plan your developments.  Please feel free to contact dawn at: for any questions.

Information contained in this Memo is intended for informational and educational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.  It is likely considered advertising.  Epps & Coulson, LLP encourages you to call to discuss these matters as they apply to you or your business.

Attorneys admitted to practice in California, New York, Colorado, Texas, and Oregon

[1] A public street, other than a freeway, that has a right-of-way of at least 70 feet and not greater than 150 feet.