Zbur Bill Protecting Hospitality Jobs and Ensuring Fair Property Valuations Heads to Governor's Desk

AB 2181 Prevents Speculative Density Bonus Assumptions from Inflating Hotel and Motel Ground Lease Costs

SACRAMENTO, CA - Democratic Caucus Chair and Assemblymember Rick Chavez Zbur's (D-Hollywood) AB 2181, legislation to protect hospitality jobs by ensuring property valuations for hotels and motels reflect realistic development conditions rather than speculative development scenarios, has passed the California State Senate and received final concurrence in the Assembly and now heads to the Governor's desk. Sponsored by UNITE HERE International and UNITE HERE Local 11, AB 2181 provides a narrow clarification to California law to prevent hypothetical residential development scenarios from artificially inflating ground lease rent resets for operating hotels and motels. When these speculative valuations drive up lease costs, they can threaten the long-term viability of hotels and the livelihoods of the housekeepers, servers, cooks, front desk staff, and other hospitality workers who depend on them.

"California's density bonus laws are an important tool for encouraging more affordable housing, but they should not be used to inflate land values based on hypothetical projects that have never been pursued or approved," said Assemblymember Rick Chavez Zbur. "When speculative development scenarios drive up ground rents for operating hotels, the consequences are very real for the workers whose livelihoods depend on those businesses. AB 2181 establishes reasonable guardrails to protect hospitality jobs while preserving our important housing tools and future opportunities for redevelopment."

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 allowing additional units, greater height, or other modifications to development standards and are 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. Increasingly, hypothetical residential redevelopment scenarios can be incorporated into these valuations based on density bonuses that have not been pursued, approved, or may not be realistically feasible. This can significantly increase ground lease costs without producing any additional housing, putting pressure on operating hotels and potentially threatening the jobs of the workers who keep them running.

AB 2181 clarifies that 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, unentitled assumptions.

The bill does not limit density bonus eligibility, restrict future redevelopment opportunities, or alter California's underlying housing policy. It simply ensures that incentives intended to encourage the construction of affordable housing are not used to inflate hotel ground rents based on projects that exist only on paper.

"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 (Zbur) matters."

AB 2181 now heads to Governor Newsom for consideration.

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]