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New Bill will Require Cities With Empty Downtowns to Fast Track Office-to-Housing Conversions

For immediate release:
  • Nate Allbee
  • (415) 756-0561

Sacramento - In response to the growing crisis of California’s rapidly emptying downtowns and the huge need for new housing statewide, Assemblymember Matt Haney (D-San Francisco) recently announced AB 1532, the Office to Housing Conversion Act. The bill stops local governments from slowing down or killing office-to-housing conversions by making their approval automatic and imposing strict time limits on all building permits. The bill also blocks local governments from ‘nickel-and-diming’ projects to death by capping unnecessary fees and design requirements. The bill will further incentivize conversions with the creation of the California Downtown Recovery Catalyst Fund that gives grants to projects that turn unused office space into housing.

The New York Times recently named San Francisco the emptiest downtown in America with office buildings estimated at only 40% of their pre-pandemic occupancy. The number of people working from home has tripled since the pandemic according to the U.S. Census Bureau, and California has the highest percentage of home-based workers in the country with roughly 35% of Bay Area residents working from home.

According to a study conducted by UC Berkeley, cities that don’t include housing in their downtowns experience significantly slower recovery from economic crises than downtowns that prioritize livability. Unfortunately many of California’s downtowns were designed without housing and night-time uses.

“How people work was permanently changed by the pandemic and the downtowns that relied on commuters are starting to look like ghost towns,” said Assemblymember Haney. “Turning empty offices into housing is one of the only paths forward to saving our downtowns.”

Meanwhile, due to California’s decades-long housing shortage, the demand for rental housing is sky high with many cities reporting rental housing vacancy rates at just 2%. This lack of housing has driven up prices, increased homelessness and caused millions of California residents to be burdened with rents they can't afford. 

“Isolating jobs from housing was always a mistake,” said Laura Foote, Executive Director at YIMBY Action, the sponsor of AB 1532. “It’s time to use the space we have to reimagine what’s possible for our downtowns. It’s time to create vibrant, mixed-use communities.”

Despite the need for more housing and a plummeting demand for office space, office conversions remain difficult to execute due not only to the hard costs of construction, but also to extensive permitting barriers, bureaucratic hurdles, and unaffordable fees. Based on other adaptive reuse efforts that have been successful in Canada and New York, AB 1532 provides incentives and removes local government barriers to conversions by enacting the following regulations statewide:

  • Removing the authority of city councils, county boards of supervisors, planning commissions, or other planning oversight boards to deny approval of any office-to-housing conversions or delay them through unnecessary review.
  • Requiring all office-to-housing conversions be allowed in all areas regardless of city zoning laws.
  • Prohibiting local governments from requiring processes that are often used to delay projects such as special permitting, review processes, or citizen appeals.
  • Requiring planning departments to respond to office-to-housing project applications within 90 days of submission. 
  • Banning local governments from creating new requirements or imposing new fees that apply only to office-to-housing conversions.
  • Prohibiting impact fees that are not directly related to the construction of office-to-housing projects and allowing the project sponsors to pay these fees over the space of 10 years.
  • Require that all office-to-housing projects dedicate 10 percent of the total amount of housing units created by the project to persons and families of low or moderate income.

AB 1532 also creates a statewide version of a highly successful model used in Calgary, Alberta to jump-start office-to-housing conversions, and revitalize their empty downtown. The California Downtown Recovery Catalyst Fund will provide grants on a square footage basis to projects located in high density, historic downtown areas that convert unused office space to housing. 

“We have to move fast if we’re going to stop our downtowns from crossing the tipping point into urban decay,” said Haney. “Unfortunately history shows that if we leave it up to local governments, they’ll hold hearings and pay for studies until it's too late. This bill stops the bureaucracy and will allow us to move fast to build desperately needed housing and bring life back to our downtowns.”