Added by Stats. 2025, Ch. 493, Sec. 4. (AB 507) Effective January 1, 2026. Operative July 1, 2026, pursuant to Section 65658.16.
This article may be cited as the Office to Housing Conversion Act.
Article 11.5 - Office to Housing Conversion Act
California Government Code — §§ 65658-65658.16
Sections (9)
Added by Stats. 2025, Ch. 493, Sec. 4. (AB 507) Effective January 1, 2026. Operative July 1, 2026, pursuant to Section 65658.16.
For purposes of this article:
(a)(1) “Adaptive reuse project” means the retrofitting and repurposing of an existing building to create new residential or mixed uses including office conversion projects.
(2)“Adaptive reuse project” shall not include any of the following:
(A)The retrofitting and repurposing of any building that is within an industrial zone that does not permit residential uses.
(B)The retrofitting and repurposing of any hotels, or any mixed-use buildings that contain hotel use, except if they have been discontinued for a minimum of five years from the date on which this article becomes operative.
(b)“Adjacent portion of the project” means the portion of the project located on a site adjacent to and attached to the proposed repurposed
existing building, including on the same parcel as the proposed repurposed existing building.
(c)“Broadly applicable housing affordability requirement” means a local ordinance or other regulation that requires a minimum percentage of affordable units and that applies to a variety of housing development types or entitlement pathways.
(d)“Impact fee” means any fee imposed pursuant to Chapter 5 (commencing with Section 66000).
(e)“Industrial use” means utilities, manufacturing, transportation storage and maintenance facilities, warehousing uses, and any other use that is a source that is subject to permitting by a district, as defined in Section 39025 of the Health and Safety Code, pursuant to Division 26 (commencing with
Section 39000) of the Health and Safety Code or the federal Clean Air Act (42 U.S.C. Sec. 7401 et seq.). “Industrial use” does not include any of the following:
(1)Power substations or utility conveyances such as power lines, broadband wires, and pipes.
(2)A use where the only source permitted by a district is an emergency backup generator.
(3)Self-storage for the residents of a building.
(f)“Historical resource” means the same as defined in subdivision (j) of Section 5020.1 of the Public Resources Code, or a resource listed in the California
Register of Historical Resources as described in Section 5024.1 of the Public Resources Code.
(g)“Local affordable housing requirement” means either of the following:
(1)A local government requirement that a housing development project include a certain percentage of units affordable to, and occupied by, extremely low, very low, lower, or moderate-income households as a condition of development of residential units.
(2)A local government requirement allowing a housing development project to be a use by right if the project includes a certain percentage of units affordable to, and occupied by, extremely low, very low, lower, or moderate-income households as a condition of development of residential units.
(h)“Local government” means a city, including a charter city, a county, including a charter county, or a city and county, including a charter city and county.
(i)“Mixed use” means residential uses combined with at least one other land use, but not including any industrial use.
(j)“Office conversion project” means the conversion of a building used for office purposes or a vacant office building into residential dwelling units.
(k)“Persons and families of low or moderate income” means the same as defined in Section 50093 of the Health and Safety Code.
(l)“Phase I environmental
assessment” means the same as defined in Section 78090 of the Health and Safety Code.
(m)“Preliminary endangerment assessment” means the same as defined in Section 78095 of the Health and Safety Code.
(n)“Residential uses” includes, but is not limited to, housing units, dormitories, boarding houses, group housing, and other congregate residential uses. “Residential uses” does not include prisons or jails.
(o)“Urban uses” has the same meaning as defined in Section 65912.101.
(p)“Use by right” means that the city’s or county’s review of the adaptive reuse project may not require a conditional use permit, planned unit development permit, or other discretionary
city or county review or approval that would constitute a “project” for purposes of Division 13 (commencing with Section 21000) of the Public Resources Code. Any subdivision of an adaptive reuse
project shall be subject to all laws, including, but not limited to, a city or county ordinance implementing the Subdivision Map Act (Division 2 (commencing with Section 66410)).
Added by Stats. 2025, Ch. 493, Sec. 4. (AB 507) Effective January 1, 2026. Operative July 1, 2026, pursuant to Section 65658.16.
(a)A local government shall not adopt or impose any requirement, including, but not limited to, increased fees or inclusionary housing requirements, that applies to a project solely or partially on the basis that the project is eligible to receive ministerial or streamlined approval pursuant to this article.
(b)This article shall not affect a project proponent’s ability to use any alternative streamlined by right permit processing adopted by a local government.
(c)Any project that qualifies as an adaptive reuse project pursuant to this article shall also qualify as a housing development project
entitled to the protections of Section 65589.5.
(d)Alterations to an existing building necessary to comply with local code, the California Building Standards Code (Title 24 of the California Code of Regulations), or the California Historical Building Code (Part 8 of Title 24 of the California Code of Regulations) shall not disqualify a qualified adaptive reuse project from the streamlined, ministerial review process established under this article.
Added by Stats. 2025, Ch. 493, Sec. 4. (AB 507) Effective January 1, 2026. Operative July 1, 2026, pursuant to Section 65658.16.
(a)Notwithstanding any other law, an adaptive reuse project shall be exempt from all impact fees that are not reasonably related to the impacts resulting from the change of use of the site from nonresidential to residential or mixed use. Any fees charged shall be roughly proportional to the difference in impacts caused by the change of use.
(b)This section shall not apply to any adjacent portion of the project.
Added by Stats. 2025, Ch. 493, Sec. 4. (AB 507) Effective January 1, 2026. Operative July 1, 2026, pursuant to Section 65658.16.
Notwithstanding any law, and in addition to any other applicable labor standards provided in this article, any adaptive reuse project approved by a local government pursuant to this article shall be subject to all of the following labor standard
provisions:
(a)Except as provided in subdivisions (b) and (c), the labor standards of Section 65912.130 shall apply.
(b)Notwithstanding subdivision (a), and except as provided in subdivision (c), for an adaptive reuse project comprising 50 or more housing units, the labor standards of Section 65912.131 shall apply in addition to those in Section 65912.130.
(c)Notwithstanding subdivisions (a) and (b), for an adaptive
reuse project involving buildings over 85 feet in height above
grade, the labor standards of paragraph (8) of subdivision (a) of Section 65913.4 shall apply.
Added by Stats. 2025, Ch. 493, Sec. 4. (AB 507) Effective January 1, 2026. Operative July 1, 2026, pursuant to Section 65658.16.
Notwithstanding any law, and in addition to any other applicable labor standards provided in this article, any adaptive reuse project approved by a local government pursuant to this article shall meet all of the following labor standards:
(a)The development proponent shall require in contracts with construction contractors, and shall certify to the local government, that the standards specified in this section will be met in project construction.
(b)A development that is not in its entirety a public work for purposes of Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of the Labor Code and approved by a local government pursuant to Sections 65658.8 and 65658.9 shall be subject
to all of the following:
(1)All construction workers employed in the execution of the development shall be paid at least the general prevailing rate of per diem wages for the type of work and geographic area, as determined by the Director of Industrial Relations pursuant to Sections 1773 and 1773.9 of the Labor Code, except that apprentices registered in programs approved by the Chief of the Division of Apprenticeship Standards may be paid at least the applicable apprentice prevailing rate.
(2)The development proponent shall ensure that the prevailing wage requirement is included in all contracts for the performance of the work for those portions of the development that are not a public work.
(3)All contractors and subcontractors for those portions of the development that are not a public work shall comply with
both of the following:
(A)Pay to all construction workers employed in the execution of the work at least the general prevailing rate of per diem wages, except that apprentices registered in programs approved by the Chief of the Division of Apprenticeship Standards may be paid at least the applicable apprentice prevailing rate.
(B)Maintain and verify payroll records pursuant to Section 1776 of the Labor Code and make those records available for inspection and copying as provided in that section. This subparagraph does not apply if all contractors and subcontractors performing work on the development are subject to a project labor agreement that requires the payment of prevailing wages to all construction workers employed in the execution of the development and provides for enforcement of that obligation through an arbitration procedure.
(c)(1) The obligation of the contractors and subcontractors to pay prevailing wages pursuant to this section may be enforced by any of the following:
(A) The Labor Commissioner through the issuance of a civil wage and penalty assessment pursuant to Section 1741 of the Labor Code, which may be reviewed pursuant to Section 1742 of the Labor Code, within 18 months after the completion of the project.
(B) An underpaid worker through an administrative complaint or civil action.
(C) A joint labor-management committee through a civil action under Section 1771.2 of the Labor Code.
(2)If a civil wage and penalty assessment is issued pursuant to this section, the contractor,
subcontractor, and surety on a bond or bonds issued to secure the payment of wages covered by the assessment shall be liable for liquidated damages pursuant to Section 1742.1 of the Labor Code.
(3)This subdivision does not apply if all contractors and subcontractors performing work on the development are subject to a project labor agreement that requires the payment of prevailing wages to all construction workers employed in the execution of the development and provides for enforcement of that obligation through an arbitration procedure.
(d)Notwithstanding subdivision (c) of Section 1773.1 of the Labor Code, the requirement that employer payments not reduce the obligation to pay the hourly straight time or overtime wages found to be prevailing does not apply to those portions of development that are not a public work if otherwise provided in a bona fide collective bargaining
agreement covering the worker.
(e)The requirement of this section to pay at least the general prevailing rate of per diem wages does not preclude use of an alternative workweek schedule adopted pursuant to Section 511 or 514 of the Labor Code on developments and portions of developments that are not a public work.
Added by Stats. 2025, Ch. 493, Sec. 4. (AB 507) Effective January 1, 2026. Operative July 1, 2026, pursuant to Section 65658.16.
In addition to any other applicable labor standards provided in this article, any development project for an adaptive reuse project approved by a local government pursuant to this article that includes 40 or more housing units and does not include a building of more than four stories in height shall be subject to all of the following:
(a)The development proponent shall require in contracts with construction contractors and shall certify to the local government that each contractor of any tier who will employ construction craft employees or will let subcontracts for at least 1,000 hours shall satisfy the requirements in subdivisions (b) and (c). A construction contractor is deemed in compliance with subdivisions (b) and (c) if it is signatory to a valid
collective bargaining agreement or project labor agreement that requires utilization of registered apprentices and expenditures on health care for employees and dependents.
(b)A contractor with construction craft employees shall either participate in an apprenticeship program approved by the Division of Apprenticeship Standards pursuant to Section 3075 of the Labor Code, or request the dispatch of apprentices from a state-approved apprenticeship program under the terms and conditions set forth in Section 1777.5 of the Labor Code. A contractor without construction craft employees shall show a contractual obligation that its subcontractors comply with this subdivision.
(c)Each contractor with construction craft employees shall make health care expenditures for each employee in an amount per hour worked on the development equivalent to at least the hourly pro rata cost of a Covered
California Platinum level plan for two 40-year-old adults and two dependents 0 to 14 years of age for the Covered California rating area in which the development is located. A contractor without construction craft employees shall show a contractual obligation that its subcontractors comply with this subdivision. Qualifying expenditures shall be credited toward compliance with prevailing wage payment requirements set forth in Section 65658.13.
(d)(1) The development proponent shall provide to the local government, on a monthly basis while its construction contracts on the development are being performed, a report demonstrating compliance with subdivisions (b) and (c). The reports shall be considered public records under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1), and shall be open to public inspection.
(2)A
development proponent that fails to provide the monthly report shall be subject to a civil penalty for each month for which the report has not been provided, in the amount of 10 percent of the dollar value of construction work performed by that contractor on the development in the month in question, up to a maximum of ten thousand dollars ($10,000). Any contractor or subcontractor that fails to comply with subdivision (b) or (c) shall be subject to a civil penalty of two hundred dollars ($200) per day for each worker employed in contravention of subdivision (b) or (c).
(3)Penalties may be assessed by the Labor Commissioner within 18 months of completion of the development using the procedures for issuance of civil wage and penalty assessments specified in Section 1741 of the Labor Code, and may be reviewed pursuant to Section 1742 of the Labor Code. Penalties shall be deposited into the State Public Works Enforcement Fund established pursuant
to Section 1771.3 of the Labor Code.
(e)Each construction contractor shall maintain and verify payroll records pursuant to Section 1776 of the Labor Code. Each construction contractor shall submit payroll records directly to the Labor Commissioner at least monthly in a format prescribed by the Labor Commissioner in accordance with subparagraph (A) of paragraph (3) of subdivision (a) of Section 1771.4 of the Labor Code. The records shall include a statement of fringe benefits. Upon request by a joint labor-management cooperation committee established pursuant to the federal Labor Management Cooperation Act of 1978 (29 U.S.C. Sec. 175a), the records shall be provided pursuant to subdivision (e) of Section 1776 of the Labor Code.
(f)All construction contractors shall report any change in apprenticeship program participation or health care expenditures to the local government within
10 business days, and shall reflect those changes on the monthly report. The reports shall be considered public records pursuant to the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1) and shall be open to public inspection.
(g)A joint labor-management cooperation committee established pursuant to the federal Labor Management Cooperation Act of 1978 (29 U.S.C. Sec. 175a) shall have standing to sue a construction contractor for failure to make health care expenditures pursuant to subdivision (c) in accordance with Section 218.7 or 218.8 of the Labor Code.
Added by Stats. 2025, Ch. 493, Sec. 4. (AB 507) Effective January 1, 2026. Operative July 1, 2026, pursuant to Section 65658.16.
In addition to any other applicable labor standards provided in this article, any development project for an adaptive reuse project that includes 40 or more housing units and that includes a building of more than four stories in height shall be subject to all of the following skilled and trained workforce provisions:
(a)Except as specified in subdivision (b), the project applicant shall enter into construction contracts with prime contractors only if all of the following conditions are satisfied:
(1)The contract contains an enforceable commitment that the prime contractor and subcontractors at every tier will use a skilled and trained workforce, as defined in Section 2601 of the Public
Contract Code, to perform work on the development project that falls within an apprenticeable occupation in the building and construction trades. However, this enforceable commitment requirement shall not apply to any scopes of work where new bids are accepted pursuant to subdivision (b).
(2)The project applicant or prime contractor shall establish minimum bidding requirements for subcontractors that are objective to the maximum extent possible. The project applicant or prime contractor shall not impose any obstacles in the bid process for subcontractors that go beyond what is reasonable and commercially customary. The project applicant or prime contractor shall accept bids submitted by any bidder that meets the minimum criteria set forth in the bid solicitation.
(3)The prime contractor has provided an affidavit
under penalty of perjury that, in compliance with this section, it will use a skilled and trained workforce and will obtain from its subcontractors an enforceable commitment to use a skilled and trained workforce for each scope of work in which it receives at least three bids attesting to satisfaction of the skilled and trained workforce requirements.
(4)When a prime contractor or subcontractor is required to provide an enforceable commitment that a skilled and trained workforce will be used to complete a contract or development project, the commitment shall be made in an enforceable agreement with the developer that provides the following:
(A)The prime contractor and subcontractors at every tier will comply with this section.
(B)The prime
contractor will provide the project applicant, on a monthly basis while the project or contract is being performed, a report demonstrating compliance by the prime contractor.
(C)The prime contractor shall provide the project applicant, on a monthly basis while the development project or contract is being performed, the monthly reports demonstrating compliance submitted to the prime contractor by the affected subcontractors.
(b)If a prime contractor fails to receive at least three bids in a scope of construction work from subcontractors that attest to satisfying the skilled and trained workforce requirements as described in this section, the prime contractor may accept new bids for that scope of work. The prime contractor need not require that a skilled and trained workforce be used by the subcontractors for that
scope of work.
(c)If the skilled and trained workforce requirements of this section apply, the prime contractor shall require subcontractors to provide, and subcontractors on the development project shall provide, both of the following to the prime contractor:
(1)An affidavit signed under penalty of perjury that a skilled and trained workforce shall be employed on the development project.
(2)Reports on a monthly basis, while the development project or contract is being performed, demonstrating compliance with this section.
(d)Upon issuing any invitation or bid solicitation for the development project, but no fewer than 14 business days before the bid is due, the project applicant or
prime contractor shall send a notice of the invitation or solicitation that describes the development project to the following entities within the jurisdiction of the proposed development project site:
(1)Any bona fide labor organization representing workers in the building and construction trades who may perform work necessary to complete the development project and the local building and construction trades council.
(2)Any organization representing contractors that may perform work necessary to complete the development project, including any contractors’ association or regional builders’ exchange.
(e)The project applicant or prime contractor shall, within three business days of a
request by a joint labor-management cooperation committee established pursuant to the federal Labor Management Cooperation Act of 1978 (29 U.S.C. Sec. 175a), provide both of the following:
(1)The names and Contractors State License Board numbers of the prime contractor and any subcontractors that submitted a proposal or bid for the development project.
(2)The names and Contractors State License Board numbers of contractors and subcontractors that are under contract to perform construction work.
(f)(1) The project applicant shall provide to the locality, on a monthly basis while the development project or contract is being performed, a report demonstrating that
the self-performing prime contractor and all nonexempt subcontractors used a skilled and trained workforce. A monthly report provided to the locality pursuant to this subdivision shall be a public record under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1) and shall be open to public inspection. A project applicant that fails to provide a complete monthly report shall be subject to a civil penalty of 10 percent of the dollar value of construction work performed by that contractor on the development project in the month in question, up to a maximum of ten thousand dollars ($10,000) per month for each month for which the report has not been provided.
(2)Any subcontractor or prime contractor self-performing work subject to the skilled and trained workforce requirements under this section that fails to use a skilled and trained workforce shall be subject to a civil penalty of two hundred dollars
($200) per day for each worker employed in contravention of the skilled and trained workforce requirement. Penalties may be assessed by the Labor Commissioner within 18 months of completion of the development project using the same issuance of civil wage and penalty assessments pursuant to Section 1741 of the Labor Code and may be reviewed pursuant to the same procedures in Section 1742 of the Labor Code. The prime contractor shall not be jointly liable for violations of this paragraph by subcontractors. Penalties shall be paid to the State Public Works Enforcement Fund, the locality, or the labor standards enforcement agency of the locality, depending on the lead entity performing the enforcement work.
(3)Any provision of a contract or agreement of any kind between a project applicant and a prime contractor that purports to delegate, transfer, or assign to a prime contractor any obligations of or penalties incurred by a project applicant
shall be deemed contrary to public policy and shall be void and unenforceable.
(g)The requirements of this section shall not apply if all contractors, subcontractors, and craft unions performing work on the development project are subject to a multicraft project labor agreement that requires the use of a skilled and trained workforce. The multicraft project labor agreement shall include all construction crafts with applicable coverage determinations for the specified scopes of work on the development project pursuant to Section 1773 of the Labor Code and shall be executed by all applicable labor organizations regardless of affiliation.
(h)The locality shall have standing to take administrative action against or sue a construction contractor for failure to comply with this section. A prevailing lead agency shall
distribute any wages and penalties to workers in accordance with law and retain any fees, additional penalties, or assessments.
Added by Stats. 2025, Ch. 493, Sec. 4. (AB 507) Effective January 1, 2026.
This article shall become operative on July 1, 2026.