AB 1401 Passes California Senate Housing

The California housing crisis is heating up as the pandemic comes to an end. People are returning to urban centers and rents are continuing to rise. On Thursday, in an effort to increase the supply of housing in the region, the Senate Housing Committee approved assembly bill 1401 to move forward to the next step. 

Now that AB 1401 is out of committee, it will move to the State Senate Appropriations Committee. If the Appropriations Committee approves the bill, it will then move to the Senate floor for a final vote. 

What will AB 1401 do?

 If the State Senate passes the bill, it will then head to Governor Newsom’s desk where it will be signed into law. Once the bill is law, it will eliminate the minimum parking requirements for housing within a half of a mile or walking distance of  public transit. It will also stop local governments from requiring parking minimums for areas with a low VMT. VMT stands for vehicle miles traveled. What this means is, a densely populated area where people do a lot of walking and less driving will no longer be allowed to have parking minimums.  

How does this impact landlords?

If a landlord has a property in an area that is impacted by AB 1401, it would create more options when it comes to building more units on the property. For example, more of the lot could be used for housing units. A lot may be big enough for a 10 unit apartment complex, but parking minimums means that instead, only 4 units are possible. By being able to build more units on a lot, it allows for landlords to get a greater return on their investment. 

Not only does this create an opportunity to build more units on each lot, it also means new developments will be less expensive and require less maintenance. Less cement would need to be poured and maintained as that space could be better used as rental apartments. 

This would also allow for landlords to access the millions of  tenants  who don’t own cars and place them in their units. There’s an assumption that everyone has a car, but that is not the case. For example, 7.5 percent of the households in LA don’t own a car. 

Creating opportunity

AB 1401 gives landlords options. When it comes to growing a business,  a landlord wants to make the best decisions based on the market, the costs, and potential return on their investment. Right now, the law in many areas doesn’t give landlords and developers that option. AB 1401 could potentially change that depending on where the property is.