California’s housing crisis is perhaps the state’s best-known feature, or now at least tied with sunshine and surfing. Despite of flurry of legislation in recent years, the state’s housing production continues to lag behind what is needed to keep pace with demand and population growth. Housing production has averaged fewer than 80,000 homes a year over the last ten years, well below the projected need of 180,000 additional homes annually needed. This lack of supply, coupled with a multi-year economic expansion, has resulted in punishing affordability numbers: the state’s median home price is around $600,000 (and much higher in portions of the Bay Area and coastal southern California), while nearly one-third pay more than 50 percent of their income toward rent.
Proposition 10, Costa-Hawkins, and General Plan Housing Elements
In November, voters rejected Proposition 10, which would have repealed Costa-Hawkins, the 1995 law that eliminatedrent control for apartment units constructed after February 1, 1995 (or earlier, depending on the jurisdiction). One of the major arguments against Proposition 10 concerned the potential impact of the repeal of Costa-Hawkins on the supply of rental housing, with opponents pointing to studies finding that rent control decreases the supply of housing, including the state Legislative Analyst’s Office, which analyzed the potential impacts of a repeal and concluded that it likely would discourage new housing construction.
The concern regarding housing supply is not new. For decades California cities have been required to identify in the Housing Element of their General Plans how they will meet their fair share of needed housing, called a Regional Housing Needs Assessment (RHNA), a number calculated by the state Housing and Community Development (HCD) Department in conjunction with regional planning bodies based upon demographic population information. In theory, jurisdictions must identify how they will meet their individual RHNA allocation to ensure that adequate housing is available for all income levels, including low and very low-income households. In practice, many jurisdictions simply identify areas where housing could theoretically be built without regard to market conditions or entitlement impediments, among other constraints on production, resulting in a significant gap between potential and actual production.
Assembly Bill 72 and the Housing Element Law
A common complaint concerns the lack of “teeth” in the state’s Housing Element law and application of RHNA numbers, as the state has rarely called cities to task for clearly deficient Housing Elements and a failure to take realistic steps to meet RHNA allocations. As a partial response to this criticism, in 2017 the state adopted AB 72, which directs HCD to review any action or failure to act by a local government that it determines is inconsistent with an adopted housing element or the state’s Housing Element Law. AB 72 further provides that HCD may revoke housing element compliance if the local government’s actions do not comply with state law and authorizes HCD to notify the Attorney General that a jurisdiction is in violation of state law for noncompliance with, among other things, California’s Housing Element Law. HCD may take any of the actions authorized by AB 72 after issuing written findings to the local government “as to whether the action or failure to act substantially complies with [California’s Housing Element Law],” and providing a reasonable time, no longer than 30 days, for the local government to respond. Gov. Code, § 65585, subd. (i)(1)(A).
The New California Administration Steps In
On January 25th the Newsom administration showed that it takes AB 72 and existing Housing Element Law seriously, as it sued the City of Huntington Beach (City), alleging that the City’s 2013 Housing Element violates the Housing Element Law, and the City has failed to enact an amendment bringing the 2013 Housing Element into substantial compliance with the law.
Specifically, the lawsuit focuses on the City’s 2015 amendment to its Beach and Edinger Corridors Specific Plan (Plan) that reduced the maximum number of allowable housing units in the Plan. Given that the City’s 2013 Housing Element relied almost solely on additional housing units in the Plan area to meet the City’s RHNA allocation and the 2015 amendment reduced permitted units below the RHNA allocation, HCD nullified its certification of the City’s 2013 Housing Element. The City thereafter responded to HCD (and to litigation brought by affordable housing advocates) by drafting an amendment to its housing element, which HCD approved. However, in March 2016 the city council unanimously rejected the amendment, and the City has taken no subsequent action to address the 2015 Plan amendment or the fact that its 2013 Housing Element has been deemed non-complaint by HCD.
Conclusion and Implications
Given the unanimous City Council rejection in 2016 of the Plan amendment and more recent comments by City officials, it appears that the City is taking a defiant pose. In 2018 City Council member Kim Carr claimed that the RHNA is “inflated and based on faulty data” and stated “I do not support the state dictating to the city how many homes we need to build or penalizing the city for failing to do so.” In response to the lawsuit, Huntington Beach City Attorney Michael Gates accused the state of unfairly targeting the City. Then, immediately following the state’s lawsuit, the City filed suit against the state, alleging that SB 35, which requires housing projects to be approved faster if they offer affordable housing and meet certain other conditions, is unconstitutional and impermissibly interferes with municipal affairs.
While the outcome of both lawsuits is uncertain, the illustrate that the Newsom administration appears ready and willing to aggressively enforce existing housing law (while almost certainly seeking further pro-housing development changes) and that many local governments will just as aggressively attempt to maintain as much local control over housing development as possible. For more information regarding California’s action against the City of Huntington Beach, see,https://www.gov.ca.gov/2019/01/25/housing-accountability/
(Alex DeGood)
