A Well-Informed Start to 2025: BBK’s Guidance for New Laws in California – Housing Part Five
New Housing Legislation Related to Tribal Housing Laws, Housing Authorities and Other Changes Affecting City Housing Programs
In part five of the Housing New Law series from Best Best & Krieger LLP (BBK), important new housing legislation for 2025 related to tribal housing, housing authorities and other bills impacting city housing programs. Below are key takeaways and analyses of SB 1187, AB 1878, AB 1872, AB 653, AB 846, AB 1053 and AB 2553.
Tribal Housing
SB 1187 establishes the "Tribal Housing Grant Program Trust Fund," which will be managed by the Department of Housing and Community Development (HCD). The fund will receive 10% of certain housing program funds, as well as any additional funds appropriated by the Legislature.
SB 1187 requires distribution of the funds to federally recognized tribes, with allocations based on a formula developed in consultation with tribes. The funding must be expended on housing for Native American and essential families residing in Native American areas, with limits on household income between 80-150% of the area's median income, depending on program type and location. A 5% allocation of funds will be reserved for technical assistance to build tribal capacity in affordable housing development.
Eligible uses of funds include: housing and community development project costs; housing and housing-related services, including homeownership and rental assistance, rehabilitation of homes, accessibility improvements, energy efficiency retrofits, and wrap-around services and support for homeless tribal members; development of community-serving amenities, such as childcare centers and health services; predevelopment costs, including planning and grant writing; administrative and management services; and program administration, property management, tenant selection, and compliance monitoring services.
AB 1878 creates the "Tribal Housing Grant Program Fund Advisory Committee," to identify and report on (1) issues within the Tribal Housing Grant Program Trust Fund that require waivers to receive state financing; (2) inconsistencies that impact the Tribal Housing Grant Program Trust Fund within state housing program streamlined regulations; and (3) barriers for tribes when applying for money from the Tribal Housing Grant Program Trust Fund.
This legislation is intended to provide tribal entities with technical assistance to access state funding for housing projects. Under AB 1878, tribal entities may also seek technical assistance when applying for state funding, as well as assistance with land use planning, natural and environmental resource planning, and economic resource planning.
AB 1878 amends state law to expand the Department of Housing and Community Development’s (HCD) authority to waive target population percentage requirements, affordability levels and unit mix requirements. The expanded list of potential waivers includes timeline requirements; service area requirements; funding match requirements; shovel-ready project requirements; requirements related to housing elements and housing plans; income limits; form of funding provided (e.g., grant or loan); phase of funding; and requirements regarding infill location or density. These waivers are intended to assist tribal entities with qualifying for funding.
AB 1878 also specifies that loans made by HCD to tribal sponsors shall be deferred for the full term, and forgiven by the department to tribal sponsors if all conditions for the loans have been satisfied.
Finally, AB 1878 provides that HCD may not require a tribe that is eligible for state funding to waive tribal sovereign immunity to access state or federal funds, subject to conflicts with other applicable laws. HCD is also required to include its designated tribal liaison, to the extent practicable, in discussions with eligible tribal recipients, and HCD's tribal liaison (and any designee) must complete a culturally competent training course prior to participating in the discussions.
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Redevelopment
AB 1782 amends California’s Health and Safety Code to enhance the use of the Low and Moderate Income Housing Asset Fund (LMIHAF). It increases the annual expenditure limit for homeless prevention and rapid rehousing services from $250,000 to $500,000, with adjustments based on inflation. The bill also allows housing successors to collaborate on regional housing projects, including transit-priority developments and homeless shelters, under specific conditions to prevent segregation and ensure affordability.
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Housing Authorities
AB 653 imposes new requirements on public housing authorities (PHAs) to improve transparency and efficiency in the Housing Choice Voucher (HCV) program. Starting July 1, 2025, PHAs must annually report key data to the Department of Housing and Community Development (HCD), including monthly success rates, payment standards, inspection wait times, and voucher search times. This data will be publicly available beginning January 1, 2026. Unlike existing law, which only requires PHAs to report such data to the U.S. Department of Housing and Urban Development (HUD), AB 653 introduces state-level reporting requirements and ensures California-specific data is accessible to the public.
AB 653 also directs HCD to convene a geographically diverse group of PHAs bi-annually from July 2025 to June 2027 to identify barriers to voucher utilization and recommend state and local solutions. By July 1, 2026, HCD must publish a publicly accessible report with actionable recommendations for improving voucher success rates, developed in consultation with program participants and stakeholders.
Additionally, HCD is required to submit an annual report to the Legislature evaluating statewide voucher success rates and detailing efforts to improve efficiency. Under existing law, there is no mandate for such reporting or legislative oversight.
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“Affordable Rent” Definition
The Department of Housing and Community Development (HCD) annually publishes “affordable rent” levels pursuant to Health and Safety Section 50053, which applies to a wide range of projects under state and local law. AB 846 amends this “affordable rent” definition to authorize different rent levels for projects with specified funding sources.
AB 846’s changes apply to rental housing developments that dedicate at least 80% of units to lower-income households and, on or after January 1, 2025, receive public financing from: (1) federal or state low-income housing tax credits; (2) tax-exempt private activity bonds or general obligation bonds; or (3) local, state, or federal loans or grants. For these projects, the “affordable rent” is the amount prescribed in deed restrictions or regulatory agreements tied to the applicable financing. This amendment will allow projects to utilize the rent levels established by sources of public funding, rather than the affordable rent levels published by HCD.
AB 846 also requires HCD to adopt regulations that limit annual rent increases for projects that received an award from the Low-Income Housing Tax Credit (LIHTC) program prior to April 3, 2024. This legislation is a follow-up to regulatory action by the California Tax Credit Allocation Committee (TCAC) that limited rent increases for projects that received LIHTC awards after April 3, 2024. The legislation allows TCAC to adopt regulations that will apply to earlier awards. The new regulations must be implemented by June 30, 2025, and TCAC must annually reassess and adjust the limits starting June 30, 2026.
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Multifamily Housing Program
AB 1053 makes significant changes to the state’s affordable housing financing system. The Department of Housing and Community Development (HCD) administers several programs aimed at constructing or rehabilitating affordable rental housing, including the Multifamily Housing Program (MHP), Serna Program, Housing for a Healthy California, No Place Like Home, Transit Oriented Development, Affordable Housing and Sustainable Communities, and federal programs such as HOME and Community Development Block Grants.
Under existing law, developers typically apply for funding from more than one program, and then use that funding commitment to secure a construction loan to start constructing the approved project. HCD provides financing in the form of 55-year deferred loans, but the financing for these loans begins only after construction is complete. This setup often requires developers to obtain a construction loan to cover bills during the construction period, which adds additional interest to the project’s cost.
AB 1053 allows HCD to make affordable housing program funds available during the construction period. Under this new section, a recipient of funds from any multifamily housing lending program administered by HCD may use those funds for construction financing, permanent financing, or both.
AB 1053 also requires HCD to adopt guidelines to implement this new financing option by July 1, 2026. These guidelines will:
- Govern the disbursement and use of funds prior to permanent financing;
- Establish the disbursement process in a way that minimizes risks of construction financing; and
- Address project and sponsor construction financing eligibility, disbursement methods for construction financing, and construction reporting requirements.
Depending on the risk profile of the project and sponsor, HCD may retain at least 10 percent of the loan amount for permanent financing after construction has been completed.
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Major Transit Stops
AB 2533 amends Public Resources Code Section 21064.3 to expand the definition of a “major transit stop.” Previously, a “major transit stop” was defined to include “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.” AB 2553 increases the frequency of service intervals from 15 minutes to 20 minutes. As such, more intersections will now qualify as “major transit stops.” Although this is not a direct change to housing laws, the amendment is relevant to various housing laws. For example, various streamlined, ministerial approval bills, including SB 9 and SB 4, preclude cities from imposing minimum parking requirements on qualifying housing developments located near major transit stops.
Disclaimer: BBK Legal Alerts are not intended as legal advice. Additional facts, facts specific to your situation, or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information herein.
Key Contacts
