Streamlining the Housing Element System
- William Fulton
- Jul 12, 2019
- 4 min read
The end result of all the wrangling between the state and local governments over housing policy in this legislative session was a trailer bill that opens the door to big fines for local governments that don’t have valid housing elements and get slapped by a judge in court over the issue. There is no new Regional Housing Needs Assessment methodology (at least so far), no withholding of transportation dollars for cities that don’t meet the standard (at least so far) – and, perhaps most significant from the local governments’ point of view, no penalty for failing to produce housing rather than plan for housing. Which raises the question yet again about whether the housing element – one of the seven required elements of a California general plan – is or can be an effective policy tool to produce more housing in the state. California legislators certainly seem to think so: A half-dozen or more bills in the last two years have either beefed up housing element requirements or included penalties for cities that don’t have housing elements that meet the approval of the Department of Housing & Community Development. But that may be simply because housing elements are the main policy tool out there in California, not necessarily the best one. Housing elements have long been recognized as a painful bureaucratic exercise and it’s always been questionable how effective they are in producing more housing. Indeed, housing policy experts often debate what the real purpose of housing elements is; some say its original purpose was fair housing – that is, to ensure that affordable housing was fairly distributed among cities and counties – rather than housing production. Much as they dislike housing elements, local governments do seem to take comfort in the fact that the state’s policy approach is about planning rather than production, since – as the League of California Cities frequently reminds everyone – cities and counties don’t actually build housing themselves. The only empirical study on the topic – produced by political scientist Paul Lewis, then of the Public Policy Institute of California and now at Arizona State University – found virtually no correlation between a valid housing element and actual housing production. But Lewis conducted his study almost two decades ago and the California housing crunch has gotten a lot worse since then. And both Gov. Newsom and the Legislature continue to focus on housing elements and the RHNA process as the state’s key policy tool to increase production. Among the new legislation adopted since 2017 are the following laws: *A bill that allows the Department of Housing & Community Development to review housing elements at will, rather than on a schedule, and refer housing element violations to the Attorney General’s Office (AB 72 of 2017). *A controversial bill (SB 35 from 2017) that allows developers to trump local control over development in certain circumstances when a city doesn’t have a valid housing element. *Two bills (AB 1771 and SB 828 from 2018) that move the state in the direction of requiring cities to take account of past housing shortfalls in undertaking the RHNA process. And now comes this year’s budget trailer bill, AB 101, which adds the fines. Specifically, the bill permits the Attorney General to order a jurisdiction to bring its housing element into compliance within 12 months or face fines of up to $100,000 a month. (The fines would be deposited into the same affordable housing trust fund account that holds funds from last year’s SB 2 real estate transfer tax.) Gov. Newsom has not signed the bill yet but probably will do so soon. If you add all this up, it looks pretty powerful. RHNA methodology will be revised in a way that will almost certainly jack up the number of housing units each jurisdiction must plan for, meaning it will be much harder for cities and counties to write valid housing elements. HCD can review a housing element and find it out of compliance at any time. Developers can override local control when housing elements aren’t in compliance. And if the Attorney General files suit, then a judge can impose crippling fines on the local government. But take a closer look. With the exception of SB 35 – which allows developers to override local control under certain circumstances – the laws all rely heavily on HCD and the Attorney General’s Office to be aggressive in pursuing errant jurisdictions. And the state’s metropolitan planning organizations will continue to be highly motivated to engage in RHNA methodologies that keep the housing target as low as possible, because that’s in the political interest of their member cities and counties. Furthermore, in reality, HCD has a reputation for engaging in extremely bureaucratic housing element reviews and the Attorney General’s Office hardly ever brings a lawsuit on a housing element case. It’s true that, right after Newsom was inaugurated, the state sued Huntington Beach over its housing element – a lawuit that got everybody’s attention. But according to leading housing element lawyer Barbara Kautz of Goldfarb & Lipman, fewer than 50 lawsuits have ever been filed over housing elements. Most of them are brought by housing advocates and poverty lawyers, not by the Attorney General, and most of them are settled over fairly narrow issues of interest to the plaintiffs. So in the absence of major reform at HCD and a more aggressive approach at the Attorney General’s Office, it’s unclear how much impact all the housing element legislation will really have. And maybe that will stimulate a discussion of how to streamline the very complicated RHNA and housing element process so that it is simple, elegant – and achievable. Recently, UCLA planning professors Paavo Mankonnen and Michael Manville put forth a proposal to simplify the whole process, with two elements: *First, require every jurisdiction to plan for 10% more housing than it currently has. *And second, institute a state override for affordable housing projects in any jurisdiction that does not have at least 10% income-restricted units. The UCLA proposal isn’t perfect – you could probably spend the rest of the day picking it apart. But it does highlight the fact that the current system – no matter what new laws are piled on top of it – is complicated and clearly isn’t accomplishing the goal of meeting the demand for new housing. In the absence of a muscular HCD and an aggressive Attorney General, you could do worse in thinking about where to start in reforming state housing policy.
