HAC-Ed: Supervisor Sauter (SF) + 2026 Legislative Priorities

This week’s HAC-Ed brought Sacramento and San Francisco into the same room.

We heard from Ali Sapirman, HAC’s Policy & Advocacy Manager, alongside our lobbyist team at Brownstein, who walked through HAC’s 2026 state legislative priorities. Then San Francisco District 3 Supervisor Danny Sauter gave a candid update on downtown office-to-residential conversions and the political realities shaping housing policy at City Hall.

From condo defect reform to dirt remediation fees to tax abatements downtown, the throughline was clear: housing feasibility is now the central policy battleground.

Sacramento: HAC’s 2026 Legislative Priorities

Ali and Brownstein focused on structural barriers that continue to prevent entitled housing from becoming built housing, particularly In 2026, HAC’s sponsored bills focus on housing elements, homeownership building codes, permitting, and feasibility. 

AB 1623 – Student, Senior & Workforce Housing in RHNA

AB 1623 seeks to address the student, senior, and workforce housing shortage by incorporating these affordable typologies into RHNA calculations.

This bill reflects recommendations from HCD and has the potential to be a “unity” bill where where cities and housers are aligned. It’s also notable that the bill is carried by a Republican author – a reminder that housing politics continue to shift, and that bipartisan coalitions are increasingly decisive (as we saw with SB 79).

AB 1903 – Condo Defect Liability Reform

This is one of the most consequential housing bills moving this year.

Condo production has effectively stalled in much of California due to litigation risk under the SB 800 framework. Developers face prolonged exposure and aggressive settlement dynamics that make for-sale multifamily an unworkable product in many markets. The result? They simply stop building it.

Assemblymember Wicks is carrying the bill, and while pushback is expected, there’s serious momentum behind this effort.

HAC is leaning into policy leadership here, including watching closely to critical case studies that shed light into why builders operating in and out of the U.S. markets continue to produce condos abroad, but are not pursuing them in U.S. areas such as San Diego.

This bill aims to rebalance a system that has effectively erased an entire tenure type.

AB 1815 (Wicks) – Modular Housing Reform

AB 1815 removes local building codes from factory build housing and only applies the statewide code. HAC has signed on as a sponsor.

The idea is straightforward: if a unit is built in a factory under state code, why should it face duplicative uncertainty at the local level?

However, there were key questions raised in our meeting:

• Would modular construction defer fully to HCD oversight?

• How would inspections function between factory and on-site assembly?

• Would local building officials retain authority over certain components?

• How does ADA compliance interact across state and local jurisdictions?

Members raised concerns about creating a “two-headed beast” between state and local authority. HCD is a strong ally, but resource constraints are real. Labor dynamics also remain a watch point. The appetite for modular is there. Execution will determine whether it unlocks efficiency or adds friction.

AB 2253 – Single Stair Reform

Having the most coverage of our bills, AB 2253 (Lee, Wicks, Wiener) would allow single-stair designs in buildings of four stories or more.

Momentum remains strong, but the long-awaited Fire Marshal report stemming from AB 835 is still pending, slowing progress. HAC’s position remains consistent:

• Single stair provides cost, safety, and design advantages.

• A blanket statewide solution

The longer the report is delayed, the longer uncertainty lingers, but policy interest has not faded.

SB 328 (Grayson) – Dirt Remediation Fee Cap

SB 328 would reinstate a $100,000 cap on DTSC’s Generation & Handling Fee for soil remediation certification.

The issue isn’t remediation itself, as developers understand and accept the need to clean up contaminated soil. The problem is what happens after.

Once remediation is complete, projects must pay certification fees to DTSC. The prior $100,000 cap was removed, and now those fees can escalate the longer projects are delayed. That unpredictability makes financing harder and adds risk late in the development process.

As Ali put it during the session: nothing is worse than a high fee except an uncertain fee.

The bill applies specifically to DTSC. Whether broader environmental fee predictability becomes part of the conversation remains an open question.

Welfare Tax Expansion

Senator Arreguín has taken up the welfare tax expansion concept, but HAC is unlikely to sponsor this year given the breadth of the current legislative package. Movement in 2026 is considered limited.

Committee hearings begin late March. If successful, implementation would land in January 2027.

San Francisco: Downtown Conversions & Political Realities

Supervisor Sauter shifted the focus to downtown San Francisco where roughly 35% office vacancy continues to reshape the city’s economic core. Much of that vacancy sits in District 3.

The city’s Downtown Revitalization & Financing District, initially launched under Phil Ting and now operational, is accepting applications to incentivize office-to-residential conversions across the Financial District, Union Square, Mid-Market, SoMa South, and the Ferry Building area.

Approximately 48 buildings have been identified as viable candidates. Not all will convert, but even a handful would materially change downtown’s trajectory. Right now, residential presence in the core is minimal and new residents could significantly shift street life and economic vitality.

Incentives include:

• Full tax abatements (subject to caps and proportional to conversion scope)

• Five-year construction timelines

• Potential impact fee waivers

• Reducing or eliminating inclusionary fees to restore feasibility

The measure passed 7-4. Some Supervisors opposed it, citing concerns about foregone revenue for parks and schools. Supervisor Sauter’s framing was direct: housing must move first. Without residents, there is no tax base to fund amenities.

He also noted two new parks planned downtown and ongoing improvements at the Ferry Building and Union Square. Market Street remains a major challenge, but a new pilot effort is expected this fall.

Political tension around prioritizing downtown is real, but Supervisor Sauter emphasized a central economic reality: downtown generates roughly 60% of the city’s GDP. If it falters, the effects are citywide.

Last year’s rezoning was step one. The next phase is cost, code, and execution.

Final Takeaway: Feasibility Is the Fight

Across both presentations, the underlying issue was clear: can this project actually pencil?

Whether the issue is condo liability, modular inspection authority, soil remediation fees, or downtown tax abatements, HAC will remain deeply engaged across all of these fronts.

We encourage members to continue bringing forward your insights, project stories, and on-the-ground realities. That feedback goes directly into the rooms where these policies are written.

Don’t hesitate to reach out, we’ll be waiting!