AB 2011 is a big deal for housing in California. The bill creates mid-rise residential development opportunities in lots zoned for office, retail, or parking, starting in July 2023. Projects are immune to CEQA and subjective committee hearings, eliminating the political risk that adds significant costs to building in California.

There are two buckets of AB 2011 projects: 100% Affordable and Mixed Use. Both have capital-A Affordable Housing requirements enforced by deed restrictions. Here we focus on identifying Mixed Use projects in California’s urban areas.

First we present a summary, followed by definitions of key terms, ending with risks for prospective developers to watch out for.

Photo by paul scherer

AB 2011 Mixed Use eligibility summary

Finding eligible lots isn’t easy. We’re building a tool combining the following checklist and local parcel information—get in touch to try it.

Lot Requirements

• Commercial zoning with office, retail or parking as principally permitted uses

• On Commercial Corridors: 70 to 150 feet wide, generally 4 to 8 lanes

• NOT within 500 feet of a freeway

• NOT within 3,200 feet of active oil or gas extraction or refinery

• NOT within a very high fire hazard severity zone

• NOT replacing Mobile Homes, RVs, or special occupancy parks

• NOT containing tribal cultural resources

• NOT swapped with a separate, non AB 2011 site by the city

• Can’t replace existing housing serving tenants within the past 10 years

• Can’t demolish a historic structure

Density and Height

The bill sets height limits and densities that vary based on the lot size and road width. The highest intensity is reserved for cities over 100k population, outside coastal zones, within 1/2 mile of major transit stops.

There is no mention of FAR or gross floor area in the bill. Rather, projects will borrow from the closest zone in the city or council that allows the density above.

Affordability requirements

All AB 2011 projects have minimum affordability requirements.

Affordable housing cost defines a limit on the percentage of household annual income spent on housing. This limit is combined with income levels, specifically the Area Median Income (AMI), to determine a maximum monthly “all-in” housing cost of 25-30% of income that includes mortgage or rent, insurance, and utilities.

There are 4 relevant tiers of income limits, defined as percentages of AMI: “extremely low” (30%), "very low" (50%), "low” (70%) and “moderate” (110%). Income limits are also adjusted by household size, which maps to number of bedrooms. A studio can fit a household of 1, a 1 bed can fit 2, etc.

As an example, the city of San Diego offers a helpful table of affordable housing costs (“gross rent”) for 2022. We’ll cover HUD adjustments in a future post.

Area median income is a county-level income metric, published by HCD and updated annually. Interestingly, the same affordable limits apply everywhere in a county, and are based on the county’s average income. Thus the income limits in working-class East San Diego take into account wealthy La Jolla. The affordability restriction may not be a limiter at all if you’re building in a lower-cost area in a county with wealth.

AMI varies widely in California. For example, the table below shows the 2021 AMI and income limits for 3 California counties of increasing income. San Francisco County's limits for a 2-person moderate income household (mapping to a 1 bedroom unit) is $143,600. Note the corresponding limit in lower cost San Bernardino is almost half.

Coastal Zone

An AB 2011 project in a coastal zone is subject to additional permitting requirements. Coastal zones are defined areas close to the Pacific Ocean, or extending inland along rivers and lagoons. See, for example, the blue line in the map below. The California Coastal Commission enforces this, and has maps on its website for the whole California coast.

Commercial Corridor

An AB 2011 project must be on a road that is considered Commercial Corridor: a high-use road, as defined by its capacity and access points to abutting lots.

Capacity is set by Right-of-Way (ROW) of between 70 feet and 150 feet. It’s measured from parcel-to-parcel (including sidewalks) and equivalent to about 4 to 8 lanes of traffic.

Access means adjacent lots can connect directly to the road. Its defined via exclusion as “not a freeway”. Freeways are defined as roads with access limited to dedicated onramps.

See Risks below for potential challenges to how ROW and freeways are defined. The relevant Vehicle Code sections are unfortunately not precise, creating some ambiguity in how the legal definition will be interpreted.

Major Transit Stops

An AB 2011 project gets extra density when close to a Major Transit Stop, as described above under Density and Height. A Major Transit Stops serves commuters via frequent bus, rail or ferry service.

There are three ways to qualify as a major transit stop:

(a) An existing rail or bus rapid transit station.

(b) A ferry terminal served by either a bus or rail transit service.

(c) The intersection of two or more major bus routes with a frequency of service interval of 15 minutes or less during the morning and afternoon peak commute periods.

On (a), note rail and bus rapid transit stations must be existing. Planned stops don’t count.

We see a lot of misreadings of (c). The requirement is the intersection of two or more frequent bus stops. This includes planned stops, which can be found in the regional transit plan and can be substantial.

Stops along a single, high frequency bus line don’t count. That’s a high-quality transit corridor, not a Major Transit Stop. We don’t make the rules, we just interpret them!

Metropolitan Jurisdiction

For maximum development intensity, an AB 2011 project must be in a metropolitan jurisdiction, as defined by the US Census Bureau. The relevant map from the Census Bureau shows almost all of California's populated areas are metropolitan (dark green), with exceptions for micropolitan (light green) in the mountainous North and Sierra Nevadas.

Neighborhood Plan

The existence of a Neighborhood Plan affects AB 2011. Unlike “general plans”, which every city has, a neighborhood plan is much more specific. It must include detailed maps of land use, utilities and development standards, and the financing and development plans to build them. An example of Foster City’s neighborhood plan is shown below. We’re building a list of plans that we believe meet this criteria.

If the property is subject to a Neighborhood Plan, AB 2011 eligibility is limited to sites that permit multifamily residential.

Note that Neighborhood Plans proposed after January 2022 don’t count, so NIMBYs can’t suddenly create them to stop development.

From the Neighborhood Plan for Foster City

Principally Permitted Use

AB 2011 requires a parcel to be eligible for office, retail, or parking as a Principally Permitted Use. This is defined by zoning. Zoning codes define both (i) what’s allowed in a lot and (ii) the process to request a building permit. Principally Permitted Uses are by-right or “automatic”, and do not require public hearings.

As an example,. there are 4 types of permitted uses in the city of San Diego. “P” stands for principally permitted uses.

Specific zones have different requirements for different uses. Here we see that in zones CC-1-1 to CC-5-6, Retail is principally permitted, making these zones eligible for AB 2011.

Known Unknowns and Unknown Unknowns

While AB 2011 creates a lot of opportunity, there are some uncertainties that a developer will have to keep in mind until they are settled by courts or follow up legislation.

Risk: Commercial Corridors right-of-way definitions

The Commercial Corridor definition is built on the definitions of right-of-way width and freeway.

(a) “Commercial corridor” means a highway…that is not a freeway, as defined in Section 332 of the Vehicle Code, and that has a right-of-way, as defined in Section 525 of the Vehicle Code, of at least 70 and not greater than 150 feet.

The definition of right-of-way is vague. Section 525 states:

“Right-of-way” is the privilege of the immediate use of the highway.

The public can use sidewalks, but that is not made explicit here. There’s an argument that sidewalks are not included, which shrinks the ROW and makes some roads not eligible.

We believe parcel-to-parcel is the right measurement, but some cities or anti-development groups may try to argue otherwise.

Risk: Exclusion zones based on nearby freeways

Certain section of avenues and expressways might be argued to be freeways, which creates a 500 ft exclusion zone. Freeway is defined in Section 332 in regards to access from abutting lands, and nothing more:

“Freeway” is a highway in respect to which the owners of abutting lands have no right or easement of access to or from their abutting lands or in respect to which such owners have only limited or restricted right or easement of access.

There are many avenues and expressways in California where abutting lands don’t have direct access, at least for certain stretches. It’s not clear if these are freeways for purposes of the 500 ft proximity exclusion.

Risk: Excessive local affordability requirements make projects infeasible

Cities may try to neuter the mixed-use bucket with arbitrarily large affordability requirements. These must apply everywhere, not just in AB 2011 eligible lots. Cities may be unable to pursue this by the pursuit of an HCD-approved housing element.

Risk: Future policy changes

As of October 2022, AB 2011 is the law of the land and comes into effect on July 2023.

It’s possible that future legislative action or a citizen’s referendum will change this.

In the event of a policy change, projects that are submitted while AB 2011 was active should retain their development rights under SB 330.

We’re building a tool to automate much of this analysis —get in touch if you’re interested in learning more. We’ll be refining the tool as the uncertainties above get clarified.

Disclaimer: this is NOT legal advice. Consult a land use attorney before investing in a project.