State Report Excoriates San Francisco for Permitting Delays
A yearlong investigation by state housing officials reveals that San Francisco's housing approval process is excessively long and violates housing laws. The report by the California Department of Housing and Community Development found that it takes 10 months longer in San Francisco compared to any other city in the state to approve housing projects. After approval, the city takes even longer to issue building permits. This situation has hindered the city's ability to address its affordability crisis and meet housing goals set by the state. Failure to reform the process could lead to the revocation of the city's state-approved housing plan, resulting in potential funding loss and the builder's remedy. The report lists numerous actions the city must take to streamline the process - including amending their panning review and reforming CEQA practices - to achieve compliance with state law. Mayor London Breed stated that many of these changes are already underway through her "housing for all" initiative, but there is criticism that the state should invest more in affordable housing. (See related CP&DR commentary.)

Court Upholds Los Angeles Transfer Tax; Appeal Likely
A group challenging Los Angeles' new transfer tax on property sales, known as the "mansion tax," is preparing to appeal after a judge ruled against them. A Los Angeles County Superior Court Judge ruled that the plaintiffs, led by the Howard Jarvis Taxpayers Association, failed to present sufficient evidence to support their claims against the city of Los Angeles. The transfer tax was implemented to fund affordable housing and combat homelessness, with a 4% tax on property sales or transfers above $5 million and a 5.5% tax on properties above $10 million. The lawsuit's outcome will impact the funds collected from the transfer tax, with the city currently only spending the first $150 million collected, which will be refunded to taxpayers if the lawsuit fails. This legal battle is being closely watched nationally as other cities consider similar mechanisms for increasing revenue. Another challenge to Measure ULA is the Taxpayer Protection and Government Accountability Act, which is scheduled for a statewide vote in November 2024 and could potentially end the transfer tax if passed. (See related CP&DR commentary.)

LAO Analyzes State's $3.3 Billion Spend on Housing & Homelessness
The Legislative Analyst's Office released a breakdown of the 2023-24 statewide budget for funding housing and homelessness programs, totaling $3.3 billion. The budget also includes $672.5 million in spending solutions, which involve spending delays, reductions and trigger restoration. These measures primarily will affect one-time and temporary spending from previous budgets. New discretionary spending of $600 million is introduced, including a $500 million one-time expansion of State Low-Income Housing Tax Credits and a $100 million one-time augmentation for the Multifamily Housing Program. Discretionary funding for housing and homelessness is limited beyond 2023-24, but some funds have multiyear expenditure authority. Budget-related legislation enhances oversight and accountability for these programs and updates the California Dream for All program to better target loans for first-time homebuyers. Additional legislation transfers the administration of programs and separates entities within the state's housing and homelessness framework.

HCD Solicits Feedback Feedback on New Neighborhood Change Map.
The Department of Housing & Community Development released a new map measuring neighborhood change in California. The map is intended to inform statewide policy for funding affordable housing. The draft Neighborhood Change Map was developed in response to initial stakeholder feedback received through the Opportunity Framework project. The goal of the Opportunity Framework project is to assess and refine the State’s approach to Affirmatively Furthering Fair Housing (AFFH) across different types of neighborhoods and multiple policy areas. Over the last year, HCD and its research partners conducted a review of the literature on the relationship between neighborhood change and AFFH objectives. HCD concluded that prioritizing affordable housing investments in changing neighborhoods could help stabilize communities and further a wider range of AFFH objectives. HCD has created a draft Neighborhood Change Map that identifies census tracts (excluding rural tracts) that have experienced both substantial racial/ethnic change and economic change, and exhibit markers of disproportionate housing need. The deadline for providing feedback to HCD is Nov. 17.

Study of Housing Underproduction Scolds Coastal Metros, Praises Central Valley
The California YIMBY Education Fund commissioned a study to analyze housing underproduction rates across the state, focusing on the impact of land-use regulations. The study used a "conversion rate" to compare historical housing permitting rates to potential market-feasible development opportunities in each city and county, assuming no zoning limitations. Key findings found, in the absence of regulatory barriers, roughly 30% of the eight million addressable parcels in California could accommodate additional market-feasible units. However, various factors, including labor shortages, material supply chains, willing sellers and zoning regulations, resulted in a statewide annual conversion rate of less than 1% between 2018 and 2021. The study identified significant variations in conversion rates among cities and counties, with some suburbs across the Bay Area and Southern California having low rates despite high housing demand. On the other hand, parts of the Central Valley and Inland Empire are converting market-feasible development opportunities into housing permits at relatively high rates. Examples of areas with high conversion rates include cities like Merced, Visalia, Stockton, and Bakersfield, as well as counties like Kern, Merced and Placer.

CP&DR Coverage: Fulton on HCD's New Aggressiveness
The state Department of Housing and Community Development has completed its review of San Francisco’s housing entitlement practices – and put the city on a very strict schedule to implement those reforms. It’s an unprecedented step for the state, intervening so directly – and with such stiff consequences – in a city’s entitlement process. The state has told San Francisco that reforms must begin as early as Thanksgiving and if deadlines are not met, HCD will revoke San Francisco’s housing element compliance. Revocation would open up the use of builder’s remedy among other things. HCD has never undertaken this kind of review before. In so doing, it relied on legal authority granted to it under Government Code Section 11180 et. seq., which allows state departments to “investigate and prosecute actions concerning all matters relating to the business activities and subjects under their jurisdiction.” And there would appear to be nothing preventing the department from undertaking additional reviews in the future for other cities.

Quick Hits & Updates

A legal dispute among investors involved in the redevelopment of Treasure Island and Yerba Buena Island continues as a court ruled against dismissing claims filed by Kenwood Investments against Stockbridge Capital Group and Wilson Meany. The ongoing litigation may potentially impact the extensive redevelopment project, which includes thousands of homes, retail space, hotels and open areas. (See related CP&Dr coverage.)

San Jose's BART extension project, which has experienced ballooning costs and significant delays, will now be overseen by an independent committee following a recent announcement. The project's cost has surged from an initial estimate of $4.7 billion to $12.2 billion, and it is now projected to open in 2036, prompting calls for greater transparency and oversight.

California State Parks and the Shingle Springs Band of Miwok Indians have signed a five-year agreement to collaborate on preserving and protecting parks located on ancestral Miwok homelands. The pact outlines joint efforts to integrate traditional ecological knowledge into conservation practices, engage in art projects and safeguard cultural resources, promoting the revitalization of sacred practices and the preservation of ancestral lands.

The Puente Hills Landfill, which closed in 2013 after decades of receiving waste from over 60 cities in Los Angeles County, is being transformed into a new regional park by the L.A. County Department of Parks and Recreation (DPR). This initiative will create the first regional park in the county in over 35 years, providing recreational and educational opportunities while addressing the severe shortage of parkland in the region.

New plans have been submitted for a suburban-style development in San Jose, utilizing the builder's remedy to streamline approval and increase residential capacity to 41 homes. The project covers 18.62 acres and includes eight affordable homes for low-income households in a suburban neighborhood near Alamitos Creek and the historic New Almaden mining town.

A recent report highlights the consequences of climate change for Lake Tahoe, revealing that the snow season could be reduced by at least a month, if not three, by the end of the century. Rising temperatures, projected to increase by up to 9 degrees Fahrenheit by 2100, are expected to make the traditional ski season too warm for snowfall at the lake's beginning and end. This decline in snowfall could have a severe impact on Lake Tahoe's ecosystem and the communities that rely on winter tourism.

The city of Martinez is embarking on a waterfront redevelopment project, aiming to revitalize its marina and make the area a regional attraction. The plans include redesigning the seawall, expanding the regional trail network, enhancing maritime recreation opportunities, creating an educational and events center and adding various amenities like restaurants, cafes and kayak launches to the waterfront, all designed with sea-level rise in mind.