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  




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          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  




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            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  




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          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  




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          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




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                    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




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                    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




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                    City of Sand City 
                    City of Stockton
                    League of California Cities