Governor Signs Zbur Bill Protecting Hospitality Jobs from Speculative Property Valuations

AB 2181 prevents hypothetical density bonus projects from driving up ground lease costs for operating hotels and motels

SACRAMENTO, CA - Democratic Caucus Chair and Assemblymember Rick Chavez Zbur (D-Hollywood) announced today that Governor Gavin Newsom has signed AB 2181, legislation protecting hospitality jobs by ensuring property valuations for operating hotels and motels reflect realistic development conditions rather than hypothetical development scenarios. Sponsored by UNITE HERE International and UNITE HERE Local 11, AB 2181 addresses a growing concern for hotels operating under long-term ground leases. When lease payments are reset based on speculative valuations for housing projects that have never been pursued or approved, costs can rise dramatically - threatening the viability of operating hotels and the jobs of the housekeepers, servers, cooks, front desk staff, and other hospitality workers who keep them running.

"California's density bonus laws are an important tool for building more affordable housing, but hypothetical projects that have never been pursued or approved should not be used to drive up costs for existing hotels and put hospitality jobs at risk," said Assemblymember Rick Chavez Zbur. "AB 2181 establishes a common-sense standard: property valuations should be based on what can actually be built, not speculative development scenarios that exist only on paper. I'm proud to see this bill signed into law, and deeply grateful to UNITE HERE International and UNITE HERE Local 11 for sponsoring this legislation and fighting every day to protect California's hospitality workers."

California's Density Bonus Law allows developers to build more housing than would otherwise be permitted under local zoning rules in exchange for including affordable housing in a project. These incentives can include additional units, greater height, or other modifications to development standards and remain an important tool for increasing California's affordable housing supply.

Many California hotels operate under long-term ground leases with periodic rent resets based on the appraised value of the underlying land. In some cases, those valuations can incorporate hypothetical residential redevelopment scenarios based on density bonuses that have not been pursued, approved, or entitled. The result can be significantly higher ground lease costs without a single additional unit of housing being built.

AB 2181 establishes a straightforward standard: density bonuses may only be considered in property valuations for operating hotels and motels when they have been entitled and vested as of the valuation date. This ensures ground lease rent resets reflect realistic development conditions rather than speculative assumptions.

The new law does not limit a property's eligibility for a density bonus, prevent a hotel property from being redeveloped in the future, or change California's underlying housing policies. It ensures that incentives intended to encourage the construction of affordable housing are not used to inflate the current value of hotel properties based on projects that have not actually moved forward.

"Every day, I clean rooms, turn over beds, and make sure guests have a good experience. It's hard work, and it's work that keeps our hotels running," said Maria Espinoza, a Sandbourne Santa Monica housekeeper. "But too often, the people who do this work - the housekeepers, the servers, the front desk staff - don't have a real voice in the decisions that affect our jobs and our workplaces. That's why AB 2181 matters."

AB 2181 takes effect January 1, 2027.

Assemblymember Rick Chavez Zbur serves as the Democratic Caucus Chair for the California State Assembly and represents the 51st Assembly District, which includes Universal City, Hollywood, Hancock Park, West Hollywood, Beverly Hills, Westwood, West Los Angeles, Santa Monica, and other portions of Los Angeles.

CONTACT: Vienna Montague, (916) 319-2051, [email protected]