Legislation to Fast-Track Land Rezoning Supposed to Increase Affordable Housing Availability

Senate Bill 4, known as the Affordable Housing on Faith Lands Act, was billed by its backers as a tool to increase affordable housing availability in California by fast-tracking developers’ ability to rezone land owned by faith-based organizations or nonprofit colleges. 

SB 4, which took effect on Jan. 1, prevents efforts to block affordable housing on such land by local governments or by challenges through the California Environmental Quality Act. It frees as much as 171,000 acres of land for affordable housing communities, according to UC Berkeley’s Terner Center for Housing Innovation.

Faith-based partnerships are often configured as ground leases, which allow religious organizations to retain land ownership and receive annual payments from developers. This, in turn, lowers the upfront costs of developing affordable housing. Because churches are often at the center of communities, it also places new residents close to key services, transit and shops.

Many hailed the passage of SB 4 as an opportunity to increase California’s supply of affordable housing. 

“SB 4 is a win-win for affordable housing in California,” said Jay Prag, a Drucker School of Management professor at Claremont Graduate University. “It provides access to land in many communities in desperate need of new affordable housing, and it cuts through the red tape that often slows or completely stymies development in some California cities.”

SB4 makes it easier for developers to build affordable housing by right, but it also potentially causes a significant rise in the cost of building these affordable housing communities. 

One company that has been active in church partnerships is National CORE, the nation’s third-largest nonprofit developer of affordable housing. The Southern California based developer began exploring partnerships with faith-based organizations a decade before SB 4 was passed. 

National CORE Chief Development Officer Alexa Washburn, who has led several such projects, described the new law as a mixed blessing. The speedier development process is balanced by a trigger for paying prevailing wages and has other provisions that can boost development costs.

“SB 4 can be a valuable tool to overcome development barriers, but it can also drive up the cost to build by as much as 30%,” Washburn said. 

Washburn said that National CORE will continue working with faith-based organizations to help realize their shared mission to serve communities with critically needed housing.

As of April 2024, the Southern California-based organization has opened communities in partnership with churches in Orange, San Diego, and Riverside counties. Three more such communities are being developed in Los Angeles and Orange County. The developments are creating more than 350 new affordable apartment homes for communities in need.

“Our church partnerships reflect an ongoing program of innovation in financing options and build on our deep commitment to collaborating with communities when proposing new affordable housing developments,” National CORE President Mike Ruane said. “We’ve often been early adopters, finding new ways to shepherd this much-needed housing to reality and then sharing what we’ve learned with the industry.”

National CORE’s first completed project was with Santa Ana United Methodist Church, a partnership launched in 2018.

“Church congregation numbers were diminishing, and they were trying to maintain two large church campuses,” Washburn said.

“They consolidated their ministry onto their north campus and freed up their downtown campus to become a family-centric affordable housing project. This approach allowed them to continue their mission of helping the most vulnerable members of their community by providing almost 100 units of beautiful and conveniently located homes that these working families can afford.”

It is from this goal that the development’s name, Legacy Square, came to be.

The church leased the land to National CORE at a below-market rate, which reduced upfront costs by about $50,000 per apartment and created a reliable income stream for the church community.

Washburn and her team worked with community members to shape Legacy Square to serve the maximum number of local residents in need. They also partnered with local organizations to secure $10 million for neighborhood improvements, including safe routes to schools, a park and new bike paths.

The result is a 93-home community that blends beautiful aesthetics, the latest sustainability construction and design, and a robust slate of resident services. Thirty-three homes serve community members who have experienced homelessness or who are at risk of becoming homeless.

Washburn said the commitment of the church community boosted neighborhood engagement and expedited approvals.

Passage of SB4 has not yet resulted in a flood of applications to use the process, but the law has only been in effect for a few months. 

“These types of partnerships can take years to come to fruition,” Washburn said. “It will take time to tell if SB4 has a significant impact in California in terms of the availability of affordable housing, but with SB4 or without SB4, we intend to keep pursuing these mutually beneficial projects with faith-based organizations.”