REAL ESTATE NEWS

California rental-housing developers could soon face new obligations to preserve or fund grocery-store capacity near their projects under AB 1674, a proposal moving through the state legislature. This has industry groups worried about what it might do to future housing supply.

The bill, authored by Assemblymember Patrick Ahrens, D-Sunnyvale, would require local governments to evaluate whether a proposed housing development in a "food desert" — or in an area at risk of becoming one — would reduce the site's ability to accommodate a full-service grocery store.

If a project is deemed to diminish that capacity, developers would have to either provide equivalent space and infrastructure for a future store or pay into a fund supporting grocery development within a half-mile of the project. The mandate would apply broadly to new apartments, townhomes, condominiums and mobile home parks.

Industry groups argue the bill's most consequential feature is its vagueness. In an opposition letter, the California Apartment Association and the California Building Industry Association warned that the undefined concept of areas "at risk" of becoming food deserts gives local governments wide discretion.

Both say this could lead to inconsistent interpretations, unpredictable entitlement outcomes and potential denials if developers cannot prove grocery-site capacity is preserved or cannot meet the mitigation requirements. The groups contend the measure adds cost, uncertainty and new barriers to housing production at a time when the state is pushing for more supply.

AB 1674 also creates a Food Desert Elimination Grant Program within the California Department of Food and Agriculture to support grocery development or retention in underserved communities. According to an Assembly Agriculture Committee analysis, the bill is intended to expand access to healthy food in low-income and low-access areas.

Despite opposition, the measure is advancing. It passed the Assembly Agriculture Committee on a 5-0 vote on March 25 and was sent to the Assembly Housing and Community Development Committee. Committee members encouraged the author to continue working with critics, but the unanimous vote signals that the bill — even with its broad, undefined standards — is positioned to keep moving through the legislative process.

California has a precedent for "developer mitigation" requirements. It already requires developers to fund or mitigate impacts tied to transportation (impact fees, VMT mitigation), schools (school impact fees), affordable housing (inclusionary zoning, in lieu fees) and climate and environmental impacts (CEQA mitigation).

Supporters argue that aggressive housing production, especially under laws like SB 330 and AB 2011, has unintentionally displaced grocery stores and stripped cities of tools to preserve food access. That equity framing resonates with Democratic supermajorities, especially in urban and suburban districts.

Source: GlobeSt/ALM