SB-968 RHNA Roll Over


SB-968 proposes that if a local government exceeds their numbers in Regional Housing Needs Allocations (RHNA) category for the current cycle, they can then roll over their surplus units towards their next RHNA cycle number target in that RHNA category.


Arguably, there are several reasons why it is difficult to build in California. Firstly, there are many obstacles in the process of approving housing projects, resulting in slow developmental progress. For instance, despite the need for over 10,000 new affordable homes each year in San Francisco alone, only one home per day has been permitted so far in 2023. Secondly, labor costs present another barrier. In San Jose, the cost of developing housing is 23% higher compared to other cities, resulting in the significant increase to the cost of affordable housing. The price to develop a single unit of affordable housing has risen by 24% since 2022, to $938,700, making it nearly impossible for working-class families to afford a modest apartment. Finally, if housing numbers for the cycle are not met, developers face consequences. Non-compliance with state housing element requirements can result in the loss of state funding and reduced local input and control over the planning process. 


With all these road blocks, interest rates have moved to the forefront as a major concern in recent years. High interest rates become more noticeable when cities have already reached their RHNA numbers for the cycle, as there is no incentive to build more since no credit will be received. This stark new barrier poses a problem for development and developers alike. Developers have to pay property tax and maintenance costs, making building during these times less desirable. The rules for cities and counties prevent them from rolling over their numbers. 



SB-968 creates a roll-over policy for RHNA housing objectives. By encouraging construction of housing through an incentive, any surplus achieved after meeting housing goals can be carried over to the next housing cycle. As a result, local governments gain the flexibility to meet housing targets and comply with state requirements, which in turn accelerates the state's housing progress. 

Click HERE to read the bill language
Click HERE to read the press release