Vol. 008: The State Warning

Current Conditions

Over the past six issues, this newsletter has traced a single thread through Triangle housing economics. Infrastructure costs are hidden in fee schedules that Zillow doesn’t show. Zoning complexity drives those costs higher. Developable land is running out. The discretionary approval process adds $50,000-$240,000 per project in carrying costs. Jurisdictional fragmentation compounds all of it at every town line.

Each of those problems is solvable locally. Fee transparency, code simplification, by-right approval pathways, regional coordination: none of it requires state legislation. All of it requires political will that most municipalities have not yet demonstrated.

State legislatures have noticed. California, Florida, and North Carolina have each arrived at the same conclusion from different starting points: when local governments don’t solve the housing supply problem, the state will solve it for them. The prescriptions differ. The diagnosis is identical.

Signals Observed

Signal 1: California wrote the playbook, and each chapter was a response to local resistance.

California’s Housing Accountability Act dates to 1982. For its first 35 years, it was largely advisory. Local governments ignored it. Then came the escalation:

2017, SB 167: $10,000/unit fines for improper denials. 5x multiplier for bad faith. Attorney’s fees to prevailing plaintiffs. 2017, SB 35: Ministerial approval for multifamily in 60-90 days when localities miss housing targets. 2021, SB 9: Duplex by-right on any single-family lot statewide. No public hearing. No discretionary denial. 2021, SB 10: Up to 10 units per parcel near transit. 2023, AB 1633: Closed the CEQA loophole localities used to delay projects indefinitely. 2023, SB 423: Extended SB 35 streamlining through 2036.

The pattern is consistent: local resistance led to state preemption, and each iteration removed more local discretion than the last. Localities found workarounds to SB 167’s fines, the state responded with SB 35’s ministerial process. Localities used design review to delay ministerial projects, the state mandated objective standards only. Localities protected single-family zoning, SB 9 preempted it statewide.

The final escalation: when a city’s Housing Element falls out of state compliance, the “Builder’s Remedy” activates. Developers can propose projects at any density regardless of local zoning. When Santa Monica’s Housing Element lapsed, Builder’s Remedy applications arrived within days.

Signal 2: Florida passed a different version, and it’s still tightening.

Florida’s Live Local Act (SB 102, 2023) took a narrower approach than California’s broad preemption. The core mechanism: if at least 40% of residential units in a proposed multifamily development are affordable for a period of 30 years, the project must be authorized by-right in any area zoned for commercial, industrial, or mixed use. No rezoning. No conditional use approval. No variance. No comprehensive plan amendment.

The state didn’t stop there. SB 328 (2024) added floor area ratio protections and expanded transit-oriented provisions. SB 1730 (2025) extended the framework to parcels owned by religious institutions and portions of planned unit developments zoned for commercial or industrial use. Three legislative sessions, each one expanding the scope and closing gaps that local governments had identified.

Florida’s approach is more targeted than California’s, it conditions by-right approval on an affordability threshold rather than mandating it across all residential zones. But the underlying logic is the same: local discretion over multifamily approval has been partially preempted, and the preemption is expanding, not contracting.

Signal 3: North Carolina has the template ready.

HB 765, the “Save the American Dream Act,” advanced through the NC House Commerce Committee in the 2025 session before stalling. The bill proposed:

• Density minimums based on population: 6 units per acre in counties over 275,000 and cities over 125,000, scaling down to 3 units per acre in smaller towns
• 90-day approval deadlines with automatic approval if missed
• Elimination of parking minimums in cities over 125,000
• By-right ADU approval
• Fee limits tied to actual costs
• Administrative subdivision approval: staff, not elected bodies

The provisions weren’t invented in Raleigh. They were assembled from California’s playbook and Florida’s framework. The 90-day auto-approval mirrors SB 35. The density minimums echo SB 9 and SB 10. The parking reform tracks Florida’s Live Local transit provisions.

HB 765 didn’t become law. Its significance is not what it enacted, it’s what it demonstrated. The General Assembly has a template. The NC Chamber’s economic analysis ($489 billion in unrealized activity, $122 billion in wage growth, 2.2 million jobs) ensures the conversation returns. The question is when, not whether.

Signal 4: The reform wave is national and bipartisan.

The pattern extends well beyond three states:

Texas (2025): Apartments in commercial zones; office-to-residential without rezoning. Montana (2025): Apartments up to 60 feet in commercial/industrial zones. Nevada (2025): By-right multifamily in commercial areas. Arizona (2025): Skip rezoning for multifamily on 10% of commercial land. Washington (2025): Transit-oriented density with tax incentives.

The federal ROAD to Housing Act ties transit funding to pro-housing policies including by-right zoning and reduced parking minimums. The direction is bipartisan. The acceleration is observable.

And within the Triangle, CAMPO’s own 2022-2027 Strategic Plan includes this sample tactic for the 3-5 year horizon: “Advocate for statewide land use planning legislation with ‘teeth.'” The regional planning body is not waiting for the state to act. It is asking the state to act.

Forecast

A version of HB 765 will return to the NC General Assembly. The economic stakes are too large and the national momentum too broad for the proposal to remain dormant. Whether it passes in 2027 or 2029, the direction is set.

Municipalities that adopt voluntary reforms before state mandates (by-right ADU ordinances, performance overlay districts, timeline commitments, streamlined multifamily approval) will retain control over implementation details. Setbacks, design standards, neighborhood-specific provisions, infrastructure capacity triggers: all of these can be calibrated locally if the reform is voluntary. Under mandate, they’ll be calibrated in Raleigh.

California’s experience offers the clearest preview: each round of state preemption removed more local discretion than the last, and each round was triggered by local governments finding workarounds to the previous mandate. The municipalities that demonstrated good faith kept more flexibility. Those that resisted lost it.

The voluntary window has a closing date. It isn’t printed on any calendar, but the trajectory from California (2017-2023), through Florida (2023-2025), to North Carolina (2025-present) suggests it is measured in years, not decades.

Watch Items

• NC General Assembly 2027 session. Any housing reform bill filed in the next session, whether a revised HB 765 or a narrower Florida-style targeted approach, signals the timeline is compressing. Watch for committee assignments and sponsor lists.
• Florida Live Local Act implementation data. As projects begin delivering under the Live Local framework, the production numbers will determine whether other states adopt Florida’s targeted model or California’s broader preemption. Early results influence the next NC proposal.
• California Builder’s Remedy applications. Cities falling out of Housing Element compliance face immediate density exposure. The volume and outcomes of Builder’s Remedy filings are a leading indicator of how aggressive state enforcement becomes when voluntary compliance fails.
• Triangle municipal code amendments in 2026-2027. Any municipality that adopts by-right ADU provisions, performance overlays, or timeline guarantees before the next legislative session is demonstrating the good faith that may preserve local flexibility. Those that don’t are building the case for mandate.

Confidence Level

Medium-High. California’s legislative sequence is enacted law with documented enforcement. Florida’s Live Local Act and its amendments are enacted and being implemented. NC HB 765 is documented legislative record with committee votes. The national reform data is from enacted 2025 legislation. The forecast, that a version of HB 765 returns, carries inherent political uncertainty, but the economic analysis and national pattern support the directional conclusion.

Aside: CAMPO’s strategic plan calls for “statewide land use planning legislation with ‘teeth.'” When the regional planning body is asking for the mandate before the state imposes it, the voluntary window may be narrower than anyone on either side of a council dais assumes.

Why This Matters

This issue closes the infrastructure arc that began six weeks ago. The sequence was deliberate: infrastructure costs are hidden in fee schedules. Zoning complexity multiplies those costs. Land is running out. The discretionary process adds more. Jurisdictional fragmentation compounds all of it. And when municipalities don’t address the accumulation (when the fees stay hidden, the code stays complex, the process stays discretionary, and the borders stay uncoordinated) states step in.

Every problem described in this arc is solvable with tools municipalities already have. The question this newsletter has been circling for six issues is whether they’ll use those tools voluntarily or have them imposed. California answered that question. Florida is answering it now. North Carolina will answer it next. The only variable is whether local governments are the authors of the reform or the subjects of it.