Gov. Newsom this week signed legislation that will provide dollars for housing while also imposing penalties against cities that refuse to build their fair share.

The legislation, Assembly Bill 101, is a trailer bill, meaning it followed the main budget bill already signed by the governor this summer.

Among other things, the bill specifically allows for fines of up to $100,000 per month if a city fails to comply with the state’s housing element law. That law mandates that cities plan for and deliver housing at all levels of affordability for their residents. About 40 California cities are out-of-compliance with this law.

In response to California’s growing homeless population – by some accounts 24% of the nation’s total – the bill also provides $650 million to local jurisdictions for homeless assistance and prevention programs. Dollars will also be available for rental assistance and incentives to landlords, including, but not limited to, security deposits and holding fees.

The bill mandates that cities and counties allow homeless shelters in areas zoned for mixed use and nonresidential. The shelters must have case managers who are focused on moving people into permanent housing.

Moreover, the bill provides grant dollars to local agencies or nonprofit associations for the construction, repair, reconstruction, or rehabilitation of accessory-dwelling units and junior accessory-dwelling units. 

At the same time, the bill allocates $500 million in new state low-income housing tax credits for new construction projects that receive a federal tax credit for affordable housing.

The hope is that these dollars will help put a dent in the state’s severe housing shortage, which is estimated at 3.5 million homes.