California Enacts New Law to Rein in Labor Regulation Loopholes in Housing Developments

📅 3 days ago

California has introduced a law to prevent developers from bypassing local labor standards in large housing projects, addressing concerns raised by recent developments in Berkeley.

In California, two housing projects in Berkeley that utilized a state program to sidestep local labor mandates have prompted the enactment of a new law aimed at preventing similar future developments. Recently, Governor Gavin Newsom signed legislation from state Senator Jesse Arreguín, which mandates that large development projects adhere to local labor standards. This includes compliance with the Berkeley ordinance that Arreguín supported during his tenure as mayor, which requires major construction projects to offer apprenticeship programs and provide health care coverage to workers.
The ordinance, set to take effect in 2024, received backing from unions within the building trades. These unions argued that the law would enhance job training initiatives, thereby strengthening the construction workforce and ensuring that workers performing hazardous jobs have access to health coverage in the event of injuries. However, developers have voiced opposition, claiming that these requirements impose millions of dollars in additional costs, potentially rendering projects financially unfeasible.
The developers involved, Laconia Development and Collab Home, managed to exempt their respective projects—a 23-story building at 2029 University Ave. and a 20-story structure at 2425 Durant Ave.—from the local labor mandates by leveraging California’s “density bonus” law. This legislation permits developers to bypass certain local regulations if their projects include a portion of affordable housing. While this law is often utilized to exceed physical limitations such as height restrictions, it also allows builders to seek exemptions from local requirements that could elevate their project costs.
In addition to the apprenticeship and health coverage mandates, Collab Home also invoked the density bonus to evade a requirement for major projects in the Southside neighborhood near UC Berkeley to pay workers a prevailing wage. Supporters of Berkeley’s ordinance, including Arreguín, accused the developers of exploiting a loophole inherent in the density bonus law to circumvent established labor standards.
Earlier this year, members of the Berkeley City Council approved the developments, albeit with some reluctance. The newly enacted law, known as SB 1383, aims to tighten this loophole, although it does not entirely eliminate it. The legislation prohibits developers from claiming density bonus exemptions from labor standards for projects that exceed 85 feet in height. Berkeley’s existing mandate applies to smaller projects of at least 50,000 square feet, which means that many mid-sized developments may still utilize the density bonus to avoid compliance with the city’s health care and apprenticeship requirements.
Importantly, the new law will not impact the two projects that spurred its creation, as they have already received the necessary permits. Senator Arreguín stated, "SB 1383 ensures that increasing our housing supply does not come at the expense of worker health and safety, a good-paying job, or construction quality." This move reflects a growing concern in California regarding the balance between expanding housing availability and maintaining fair labor practices within the construction industry.

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