Assemblymember Matt Haney Proposes Office to Housing Conversion Act for California
The pandemic has brought about some unexpected changes to the real estate market, particularly in California’s downtown areas. With the shift to remote work, many office spaces have become empty, and lawmakers are now proposing a solution to this problem – converting office buildings into desperately needed housing. This idea could provide an opportunity for developers to revitalize downtown areas and create more affordable housing options for Californians.
Assemblymember Matt Haney is introducing a bill that would make it easier and faster to convert office buildings into new apartments and condos. With the proposed rules, property owners throughout the entire state could take advantage of this opportunity, including low-rise office buildings in suburban communities that have long resisted building more homes. This bill could also help cities revitalize downtowns from a 9-to-5 office hub into a more balanced mix of offices, housing, entertainment, retail, and other amenities.
Potential pros and cons of the bill
More affordable housing options: The conversion of office buildings into housing could provide more affordable housing options for Californians, particularly in downtown areas.
Revitalization of downtown areas: The bill could help revitalize downtown areas, making them more livable and attractive to residents.
Easier and faster conversion process: The proposed rules could significantly cut down on the time and costs associated with converting office buildings into housing.
Financial incentives: The bill could make use of $400 million in grants Gov. Gavin Newsom has outlined in his recent budget proposal specifically for such projects.
Lack of local control: The bill would strip nearly all local control over conversion projects, which may not be desirable for some cities and counties.
Financial feasibility: Redeveloping an office building into housing is an expensive proposition, and rising building costs and interest rates for construction loans could make it even more costly.
Uncertainty about demand: There may be uncertainty about the demand for housing in downtown areas, particularly in light of the pandemic.
Environmental concerns: The bill would exempt office-to-housing projects from the state’s strict environmental review process, which may raise concerns among some residents.
In its current form, the bill would require conversions to be allowed in all areas regardless of local zoning laws, limit development fees on conversion projects, and require that all conversion projects set aside 10% of housing units for low- or middle-income residents. While some cities and counties may lobby Sacramento to push back on Haney’s proposal, he remains confident about the bill’s chances.
The “Office to Housing Conversion Act” could provide an opportunity to revitalize downtown areas and create more affordable housing options for Californians. While there are potential pros and cons to the bill, it’s important to stay informed and engaged in the legislative process.
As always, if you have any real estate questions or looking to buy or sell your home, you’re always welcome to reply to me here or send give me a call!