BILL ANALYSIS SENATE HOUSING & COMMUNITY DEVELOPMENT COMMITTEE Senator Joseph L. Dunn, Chair Bill No: SB 910 Hearing:April 2, 2001 Author: Dunn Fiscal:Yes Version: March 27, 2001 Consultant:Mark Stivers HOUSING ELEMENT ENFORCEMENT Background and Existing Law : The Planning and Zoning Law requires cities and counties to prepare and adopt a general plan to guide the future growth of a community. Every general plan must contain seven elements: land use, circulation, housing, conservation, open-space, noise, and safety. A housing element must identify and analyze existing and projected housing needs, identify adequate sites with appropriate zoning to meet the housing needs of all income segments of the community, and ensure that regulatory systems provide opportunities for, and do not unduly constrain, housing development. Cities and counties must revise their housing elements every five years, following a staggered statutory schedule. Before each revision, the regional council of government (COG), in conjunction with the Department of Housing and Community Development (HCD), prepares a regional housing needs assessment (RHNA) and allocates to each jurisdiction in the region its fair share of the housing need for all income categories. Each community's identification of adequate sites must satisfy the housing allocation targets set by the COG. Prior to adopting or amending a housing element, a local government must submit a draft to HCD for review. The department is required to report within a specified time schedule its written findings as to whether or not the draft element or amendment substantially complies with the law. If HCD finds that the draft does not comply with the law, the local government is required to bring the draft into compliance or adopt the draft with written findings SB 910 Page 2 which explains why the jurisdiction believes the housing element complies with the law despite the department's findings. Within 120 days of the final adoption of a housing element or amendment, HCD is required to review the final document and report its findings as to whether the housing element complies with state law. Either the Attorney General or a private party may bring suit to enforce housing element law. In any such legal action, there is a rebuttable presumption that a jurisdiction's housing element is valid if HCD has found that the element substantially complies with state law. If a court finds that a local government has not substantially complied with the law, the court may order the jurisdiction to bring its housing element into compliance within 120 days and/or halt any or all further development in the community until the housing element is brought into compliance. Proposed Law : Senate Bill 910 creates sanctions for local governments that fail to comply with state housing element law. Specifically, the bill: Creates a rebuttable presumption that, if HCD finds a jurisdiction substantially out of compliance with housing element law and a suit challenging the validity of the element is filed, the jurisdiction's element will be presumed by a court to be invalid. Makes explicit that plaintiffs who successfully challenge the validity of a community's housing element may recover their reasonable costs and fees. Requires a court to assess penalties against a jurisdiction whose housing element the court has found to be invalid. The court may determine the appropriate fine amount up to $1000 per unit of total projected housing need for the jurisdiction as identified in the regional housing needs assessment process. All fines are deposited in the state's Housing Rehabilitation Loan Fund, which is used to develop affordable rental housing through the Multifamily Housing Program. Requires the Controller to withhold a specified SB 910 Page 3 percentage of street and highway maintenance and repair funds from a local government that has not adopted a housing element that HCD has found to be in substantial compliance with the law. The amounts to be withheld are calculated according to the following schedule: ? For the first six months after the community's deadline date for the third or subsequent update of its housing element, no funds are withheld. ? After six months, 20% of each monthly allocation is withheld. ? After one year, 40% of each monthly allocation is withheld. ? After two years, 60% of each monthly allocation is withheld. Any funds withheld are required to be added to the total pool of funds to be distributed in the following month to all local governments according to existing formulas. The housing elements of jurisdictions within the San Diego Association of Governments who have elected to self-certify their housing elements under a special pilot program are deemed to have been approved by the department unless a court has found the element to be invalid. The bill further requires HCD to provide the Controller each month with a list of jurisdictions whose housing elements have not been approved and the dates for which each of these elements was due. Comments : 1. Purpose of the bill . In order for the private market to adequately address existing need and new demand for housing, local governments must adopt land use plans and regulatory systems which provide opportunities for, and do not unduly constrain, housing development. While the large majority of cities and counties in the state have adopted adequate housing elements, roughly 30% of the state's local jurisdictions have failed to comply with the law. The result is that developers cannot access land or the entitlements they need to produce new housing, exacerbating the state's housing crisis. By shirking their responsibility to make land available for their fair share of the region's housing needs, these local governments effectively raise the price of housing for working families SB 910 Page 4 even higher and force surrounding jurisdictions to take on a larger housing burden. According to the author, current housing element law lacks teeth. Enforcement depends on private developers or non-profit lawyers suing local governments for non-compliance. In instances where the court does find cities or counties out of compliance, the remedies are limited. The court may order the jurisdiction to bring its housing element into compliance and may halt development in the community in the meantime. For local governments that do not have major commercial or industrial projects pending, this is equivalent to no remedy at all. While HCD currently reviews all housing elements for compliance with state law, there are almost no sanctions for jurisdictions whose elements are found to be inadequate. Recent legislation created the Jobs Housing Balance Improvement Program which rewards cities and counties for increasing the overall number of homes they permit. In some cases, incentives like these will provide sufficient reason for a local government to adopt a valid housing element. In other cases, communities may still choose to pass up financial incentives. In these instances, the author believes that sanctions are both necessary and appropriate to ensure that all communities meet their fair share of the state's housing need. 2. Good for the goose and good for the gander . Current law creates a legal presumption that a local government's housing element is valid if it has been approved by HCD. However, no similar presumption exists if HCD finds the jurisdiction's housing element to be inadequate. The committee may wish to consider whether the presumption should work both ways as opposed to just in favor of a local government. 3. Automatic attorney's fees and costs . In most cases where the adequacy of a housing element is successfully challenged in court, the plaintiff is able to receive reasonable fees and costs. State law allows the court to make such awards if the case results in enforcement of an important right affecting the general public and if a) a significant benefit has been conferred on the general public or a large class of persons; b) the necessity and financial burden of private enforcement are such to make SB 910 Page 5 the award appropriate; and c) in the interest of justice such fees should not be paid out of any recovery. The committee may wish to consider whether enforcement of housing element law generally meets these tests so as to make an automatic award appropriate. 4. Arguments in opposition . The League of California Cities and the California State Association of Counties argue that local governments are not the only or even main reason that the state's housing needs are not being met. They believe that this bill casts local officials as uncaring about their communities and is overly punitive. They raise the following specific points: The rebuttable presumption of nonvalidity "elevates the opinion of an HCD staff member above the opinion of a judge" and subjects local governments to over-zealous interpretation of the law by the state. With respect to attorney's fees, the question of whether a significant benefit derives from the court challenge should be left for a judge to decide. The ability of the court to halt development is sufficient remedy for non-compliance with housing element law and monetary penalties are therefore inappropriate. Withholding state road repair funds from non-compliant jurisdictions will reward those who "collaborate" and punish those who "question the assumptions [of HCD] or mention local realities." As opposed to incentives, withholding funds will further jeopardize state and local government relations. Housing element compliance is a convenient target for the lack of progress on larger housing supply issues, such as local government tax reform, state financing for affordable housing, and construction defect litigation. Support and Opposition : (3/27/) Support: Job-Center Housing Coalition (co-sponsor) California Rural Legal Assistance Foundation (co-sponsor) Western Center on Law and Poverty (co-sponsor) Apartment Association California Southern Cities Asian Law Alliance, San Jose Barbara Sanders and Associates SB 910 Page 6 Berkeley Property Owners Association Burbank Housing Development Corp., Santa Rosa California Apartment Association California Building Industry Association California Church Impact California Federation of Labor, AFL-CIO California Housing Council, Inc. California Network of Neighborhood Programs California Reinvestment Committee California State Association of Electrical Workers California State Pipe Trades Council Chico Housing Improvement Program Children Now Children's Advocacy Institute CHISPA, Salinas City Heights Community Development Corporation, San Diego Civic Center Barrio Housing Corp., Santa Ana Coachella Valley Housing Coalition, Indio Coalition for Economic Survival, Los Angeles Community Resource Associates, Clayton Congress of California Seniors Council of Community Housing Organizations, San Francisco East Bay Asian Local Development Corporation, Oakland Eden Housing, Hayward Enterprise Foundation, Los Angeles Friends Committee on Legislation of California Friends of the Homeless, Santa Rosa General Assistance Advocacy Project, San Francisco Great Northern Corporation, Weed Gubb & Barshay, LLP, San Francisco Harbor Interfaith Shelter, San Pedro Homeward Bound of Marin Housing Authority of the County of Santa Clara Inglewood Neighborhood Housing Services JRT and Associates, Sausalito La Raza Centro Legal, Inc., San Francisco Los Angeles Housing Law Project Lutheran Office of Public Policy California Mercy Housing California Mid-Peninsula Housing Coalition, Redwood City Minority Apartment Owners Association SB 910 Page 7 Napa Valley Community Housing Neighborhood House Association, San Diego Nevada County. Housing and Community Development, Nevada City Older Women's League Orange County Community Housing Corp., Santa Ana Pajaro Valley Housing Corporation, Watsonville People's Self-Help Housing Corporation, San Luis Obispo Preservation Properties, Santa Monica Protection and Advocacy, Inc. Related Companies of California Renee Franken Associates, Sacramento Rubicon Programs, Inc., Richmond Rural Communities Housing Development Corporation, Ukiah Sacramento Gray Panthers Sacramento Mutual Housing Association Sacramento Neighborhood Housing Services Santa Barbara Rental Property Association Santa Clara County Housing Action Coalition Senior Housing Action Collaborative, San Francisco Shelter Partnership, Los Angeles Sisters of Saint Joseph's of Carondelet, Los Angeles South County Housing, Gilroy Southern California Association of Non-Profit Housing St. Peter's Housing Committee, San Francisco The Tenderloin Housing Clinic The Agora Group, Goleta The Fair Housing Council of San Diego Venice Community Housing West Hollywood Community Housing Corporation Western States Council of Sheet Metal Workers Westside Fair Housing Council, Los Angeles WNC Associates, Costa Mesa Opposition : California State Association of Counties City of Arcata City of Gustine City of Concord City of Foster City City of Monrovia City of National City SB 910 Page 8 City of Sand City City of Stockton League of California Cities