Existing law, the Office to Housing Conversion Act, starting July 1, 2026, deems an adaptive reuse project, as defined, a use by right in all zones, regardless of the zoning of the site, and subject to a streamlined, ministerial review process, if the project meets specified requirements. Existing law authorizes a local government to adopt an ordinance implementing the act and specifying the process and requirements applicable to adaptive reuse projects. If a local agency does not adopt an above-described ordinance, existing law requires the local agency to ministerially, without discretionary review, approve or disapprove applications for a permit to create or serve an adaptive reuse project, as specified.

Existing law, the authorizes a city or county, or city and county, commencing in the 2026–27 fiscal year, to establish an adaptive reuse investment incentive program. If a city or county, or city and county, establishes that program, existing law requires, upon approval of the governing body, the city or county, or city and county, to pay adaptive reuse investment incentive funds to the proponent of a qualified adaptive reuse project property, approved pursuant to the streamlined, ministerial process described above, to subsidize the affordable housing required under the Office to Housing Conversion Act, as specified. Existing law defines “qualified adaptive reuse project property” to mean an adaptive reuse project proposed pursuant to the Office to Housing Conversion Act that is located within the city or county.

This bill would expand the definition of qualified adaptive reuse project property to include adaptive reuse projects that fall under the Office to Housing Conversion Act regardless of compliance with affordability criteria or labor standards specified in that Act, thereby expanding payment of adaptive reuse investment incentive funds to certain adaptive reuse projects that do not have the requisite affordability or labor standards as specified in the Act, as provided. The bill would also expand the requirement on those cities, counties, and cities and counties to pay adaptive reuse investment incentive funds to the proponent to, in addition to subsidizing affordable housing units, subsidize the project’s housing units.

Existing law authorizes a city or special district to pay to the city or county, or city and county, an amount equal to the amount of ad valorem property tax revenue allocated to that city or special district, but not the actual allocation, derived from the taxation of that portion of the total assessed value of that real property that is in excess of the property’s valuation at the time of the proponent’s initial request for funding, for the purpose of subsidizing the affordable housing units required pursuant to the Office to Housing Conversion Act.

This bill would expand the authorization for a city or special district to pay to the city or county, or city and county, as described above, for the purpose of subsidizing the project’s housing units.