State Senator Anthony J. Portantino’s SB 1299 has passed the Senate Housing Committee with strong bipartisan support. The bill is now headed to the Senate Appropriations Committee. The Los Angeles County Business Federation (BizFed) brought the idea for the bill to the senator earlier in the year to help address Los Angeles County’s housing shortage.

SB 1299 seeks to create an incentive program for cities to convert abandoned “big box” retail sites into affordable and workforce housing. Under Portantino’s bill, local governments will be able to use these incentives to replace sales tax revenues previously generated from big box retail stores. Specifically, SB 1299 will enable local cities to receive from HCD the average of the annual amount of sales tax revenue generated by that site for the last seven years if the site has been converted and occupied with new housing. The city would receive that average amount for a total of seven years.

“I am excited to be working with BizFed on this creative idea to generate more housing production,” said Portantino. “California’s severe housing shortage needs creative and financially viable proposals and this is one that has significant merit. Despite having some of the highest incomes in the country, California is among the nation’s leaders in both housing insecurity and effective poverty rate. This bill will generate housing production and incentivizes local governments to build the truly affordable housing that Californians need.”

HCD estimates that California needs to be building almost 200,000 housing units a year to keep up with demand and create a sustainable housing supply for Californians. Unfortunately, the state is achieving around half of that target, causing the problem to compound. The rise of e-commerce has cratered the demand for traditional shopping centers resulting in significant store closures. The ongoing COVID-19 pandemic will likely contribute to this as well, as many stores that were on the brink face uncertain financial futures.