Timeline: California Housing Element Law
June 7, 2007
Local Governmental Relations CommitteeThe following is for study only and has NOT been approved by the Local Governmental Relations or Executive Committees or the Board of Directors.
TIMELINE
Original housing element legislation signed into law. New law requires all cities and counties to include a housing element as part of their general plan.Legislation requires that localities follow HCD guidelines in preparing housing elements.Clarifying legislation prescribes that although HCD guidelines are advisory, localities must consider the state’s review beforeadopting a local housing plan.Institute for Local Self Government reports California is producing 270,000 new units per year.Community Investments Newsletter reports that California is one of the first states to create legislation supporting a housing trust fund, which in theory would have funneled revenue from offshore oil drilling to the productionof affordable housing in the state. Advocates cheered the legislation, anticipating funds of around $20 million each year to be dedicated to affordable housing programs. However, the fund ended up allocating $2 million a year for affordable housing, most of which was directed in support of ongoing programs like providing emergency shelter.Federal Tax Reform Act passed, which according to theInstitute for Local Self Government, reduces the incentive of the private market to build housing by extending the depreciation schedule on rental housing from 19 to 27.5 years and eliminating passive loss provisions. Prior to 1986, California produced around 150,000 units per year of rental housing, but averaged only 27,000 per year 16 years since.Two major legislative hearings are held (Senate Committee on Local Government, 1993; Senate Committee on Housing and Land Use, 1995). According to the Public Policy Institute of California, many voices at these hearings criticize the existing policy regime. Reform discussions are geared at streamlining the planning process for housing elements and making the regional housing need allocation (RHNA) process more attuned to local government concerns and capacity for growth. These discussions also emphasize performance in accommodating housing rather than the process of housing element planning.A study released by Arizona State University indicates about half (45%) of cities statewide are in compliance with housing element law, after extremely low compliance rates in the early 1990s.A number of local government representatives have sought the ability for localities to “trade” or transfer their allocations with each other, presumably in exchange for payments or other considerations. AB 3561 (Speier) enables transfers among jurisdictionsunder certain circumstances. According to Paul Lewis in a report from the Public Policy Institute of California, the provisions for transfer are quite strict and constrained. AB 2864 (Torlakson) creates the Jobs/Housing Balance Incentive Program with elements of a “rewards for performance” approach in an effort to increase local housing production. The program authorizes devoting $100 million in grants to local governments that demonstrate increased issuance of building permits, if they have adopted housing elements that are in compliance with state law.CAR co-sponsors AB 369 (Dutra), which allows the prevailing plaintiff (builder or developer) in an anti-NIMBY lawsuit to receive reasonable attorney fees if the local government had turned down or "effectively" turned downa low or moderate-income housing development when the builder/developer has complied with the local government development requirements such as general plan and zoning code requirements. This measure is signed into law by the Governor.CAR-supported SB 910 (Dunn), which is amended into SB 498, passes the California Senate but later dies in the assembly. It would have required that the state controller fine noncompliant cities. In its original, more punitive form, the bill would have widened penalties for noncompliant jurisdictions to include ineligibility for certain state transportation funds and directed state courtsto presume that noncompliant housing elements are invalid. As a result, that bill would have opened up such jurisdictions to more litigation from housing rights’ organizations and developers. Assembly Member Lowenthal, who did not support the bill, specifically mentions that the bill needed to include a fair process for local governments before any fines could be imposed.Public Policy Institute of California argues that enticing communities to accommodate housing would not be such an uphill battle if the local fiscal system was recalibrated so that localities would be rewarded directly for increases in population or housing units. AB 680 (Steinberg), which dies in committee, took such an approach. The bill would have enacted a regional sales tax sharing program within several counties. CAR opposed the measure because it would have given regional government new authority to make land use decisions, which could conflict with local government zoning and planning decisions. Further, a COG would have been allowed to fund regional projects in jurisdictions thatwere not deemed housing eligible, creating a disincentive for those local governments that took the steps to build their share of housing.SB 423 (Torlakson) provides somespecific instructions on how the Jobs/Housing Balance Incentive Program funds are to be allocated.SB 1432 (Alpert) makes San Diego County local governments that self-certify their housing elements eligible for proposed Prop 46 programs that require HCD approval of a housing element. This will sunset in 2009 unless the legislature acts to continue it.CAR sponsors AB 2292 (Dutra), which requires that local governments retain the residential zoning densities that they refer to in their approved housing elements. Cities and counties that “downzone” (reducethe allowable density of) residential land must transfer the “lost” density elsewhere in the community to make up for the loss in potential housing units. The bill also requires a court to award attorney fees and costs of asuit to the plaintiff (builder/developer) if the court finds that an action of the locality is in violation of these provisions. This measure is signed into law by the Governor.HCD reports that California suffers from a significant shortfall of housing production. Despite the projected need for 220,000 new housing units annually through the year 2020, the state is currently producing approximately 150,000 units. Despite these projections, there are strong indications the voters do not really want the state (or their community) to grow at that rate. HCD cites a 66% decline in federal efforts to spur new subsidized housing starts between 1976-1996.A study of 40 fast-growing Bay Area jurisdictions finds that only 34% of affordable housing goals were met in those communities with certified housing elements; only 9% of affordable housing goals were met in noncompliant jurisdictions.Voters approve Prop 46, the Housing and Emergency Shelter Trust Fund Act, authorizing a $2.1 billion housing bond. The bond earmarks $100 million to continue funding the Jobs/Housing Balance Incentive Program. According to the California Budget Project, the bond is not enough to solve a crisis that has been over a decade in the making. According to Carolina Reid in Community Investments Newsletter, Prop 46 has helped to leverage private investment, raise public support for affordable housing, and generate interest among municipalities in establishing local housing trust funds. However, Prop 46 revenues, a one-time infusion, will be exhausted in 2007. In this regard, it still falls short of what the state needs: a housing trust fund with an ongoing, stable revenue source.SB 1634 (Figueroa) would have required that regional planning councils, in making RHNA allocations to local governments, seek to improve the geographic balance of employment and housing in each region. AB 2863 (Longville) would have eased definition of “substantial compliance” under the housing element law and broadened the definition of what constitutes a “residential unit” that can count toward fulfilling a locality’s housing goals. However, neither SB 1634 nor AB 2863 is ever given a committee hearing, and both bills die.CAR co-sponsors SB 619 (Ducheny) which provides that low and moderate rental housing developments of 100 units or less can not be denied a permit if they comply with local government development standards and receive a negative declaration or a mitigated declaration under CEQA. This measure is signed into law by the Governor.Public Policy Institute of California reports there is no difference between local agencies that had an approved element and those that were noncompliant in terms of total number of units built. The Central City Association Housing Production Committee recommends that the City of Los Angeles declare a housing shortage “State of Emergency,” with associated policy changes that give housing production priority over competing needs.HCD establishes the Housing Element Working Group in response to concerns regarding the implementation and effectiveness of California’s housing law. The Group identifies six basic areas for reform. Legislative leaders/authors agree to a housing element bill moratorium while the Group seeks agreement. Each of the major stakeholder groups select one or two representatives for Group membership. Stakeholders include local governments, Councils of Governments, planners, builders, and affordable housing advocates.The Housing Element Working Group Final Report to the Assembly and Senate Housing Committees outlines the proposals coming out of the Group and summarizes the areas where consensus was not achieved but important progress made on critical issues.AB 2158 (Lowenthal) reforms the process by which the regional allocations are developed by the state and assigned to the regions. It requires that the COGs seek input from the cities andcounties about the factors and methodology for allocating each jurisdiction’s housing need. This measure is signed into law by the Governor. This reform is due, in large part, because of the Housing Element Working Group.CAR initially sponsors AB 2348 (Mullin). Early in the legislative session, the bill’s author amends the bill, making non-controversialchanges to the housing element law. With these changes, CAR decides it will not sponsor this measure. The bill requires local agencies to include even more specific information in their inventories, and it makes it easier for courts to scrutinize housing elements more closely. This measure is signed into law by the Governor. This reform is due, in large part, because of the Housing Element Working Group. Institute for Local Self Government reports that 53% of local jurisdictions are in compliance with the housing element law, and the state produces less than 150,000 new units. Another study released by Arizona State University reports about one-third of cities and one-quarter of counties are noncompliant.CAR sponsors SB 326 (Dunn) to expand the provisions of SB 619 to duplexes, triplexes, and fourplexes, and further expands the state anti-NIMBY law to charter cities. This measure is signed into law by the Governor.AB 1233 (Jones) states that with respect to the housing element, any unmet housing need from a prior planning period shall be included in the next planning period. The intent is to keep localgovernment accountable for its planning actions and compel them to not ignore unmet housing needs. This measure is signed into law by the Governor. CAR supports SB 575 (Torlakson) because it requires local governments to be held accountable. The bill revises the conditions upon which local government disapproval or a conditional approval of the housing development project is based. This measure is signed into law by the Governor.CAR sponsors AB 712 (Canciamilla) to extend the sunset provision in AB 2292 to December 31, 2008. This would allow the successful plaintiff to recover attorney fees when he or she prevails in court by demonstrating to the court that a local government arbitrarily denied the plaintiffs residential development that was in compliance with the local government’s development standards. This measure is vetoed by the Governor.A Fannie Mae Foundation study reports that the state’s method for overseeing local housing elements does not appear to result in a faster pace of residential development among cities that were seen as meeting their planning requirements, at least for the mid- to late 1990s.CAR co-sponsors AB 2511 (Jones) that amends the Permit Streamlining Act to apply to subdivisions with 49% of affordable housing, rather than the previous requirement of 100%, and mandates local governments report to the state their housing production in an effort to make sure that they can accommodate their share of the regional housing need for the ensuing 5 years. The bill provides judicial relief for those who challenge local governments that refuse to disclose their plan for meeting the regional housing need to HCD and would require the plaintiff to inform the Attorney General should a plaintiff sue the city or county alleging that government is not in compliance with state law. This measure is signed into law by the Governor.CAR co-sponsors SB 1330 (Dunn) to extend the sunset provision in AB 2292 to December 31, 2008. Thiswould permit homebuilders and other interested parties (e.g., homeowners) to recover attorney’s fees should they prevail in their challenge of a local government’s compliance with the housing element law. This bill fails passage in committee.According to preliminary year-end data compiled by the Construction Industry Research Board, housing starts – as measured by building permits issued – totaled 163,449 during 2006, a 22% decrease from 2005. The total includes 106,953 single-family homes (down 31% from 2005) and 56,496 apartments and condos (up 5.3% from 2005). In his 2007 Housing Forecast, CBIA Chief Economist Alan Nevin forecasts that housing starts for single-family homes, condos, and apartments should total between 155,000 and 170,000 in 2007.Nearly 78% oflocal jurisdictions have adopted housing elements in compliance, 10.3% have adopted housing elements out of compliance, and 2.4% have housing elements under HCD review.CBIA President and CEO Robert Rivinius says the industry needs to build well over 200,000 new homes, condos, and apartments a year to meet the need for housing. “California needs new homes in all price ranges, and given the ever-rising fees and constraints on housing, it’s all but impossible to meet the need in the entry-level market, where the need’s the greatest. Given California’s constant population growth of some 500,000 people a year, the state needs between 220,000 and 240,000 new homes and apartments every year just to keep pace. Unfortunately, we haven’t hit that level since the late 1980s, and unless major reforms are enacted at the state level to allow increased production, it does not appear that we will reach it anytime soon.”According to the Los Angeles Times, a report released Tuesday pegs the state’s population at almost 37.7 million. That represents a growth of almost 1.3%, or 470,000, in 2006. The increase occurred over the last year, as L.A. added 10,239 housing units. The L.A. region, said EdwardSoja, a professor of urban planning at UCLA, “has the worst housing crisis anywhere in the developed world. It’s not being addressed with the urgency it needs to be addressed.” Los Angeles gained 37,658 residents last year, and as of Jan. 1, its population was 4,018,080.
