BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 910
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          Date of Hearing:   June 5, 2002

                       ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
                               Patricia Wiggins, Chair
                      SB 910 (Dunn) - As Amended:  May 30, 2002

           SENATE VOTE  :   22-12
           
          SUBJECT  :   General plans:  housing elements.

           SUMMARY  :   Modifies state housing element law based on  
          negotiations that have occurred through a working group  
          established by the Assembly Local Government Committee, Assembly  
          Housing and Community Development Committee and Senate Housing  
          and Community Development Committee.  Specifically,  this bill  :  

          1)Modifies housing element updates from a five-year cycle to a  
            six-year cycle to coincide with the three-year cycle used for  
            transportation planning.  This change is intended to ensure  
            that population projections produced by the state and councils  
            of governments (COGs) are completed at about the same time, to  
            provide the most recent data to calculate regional housing  
            need and to allow COGs to more effectively coordinate land use  
            and transportation decisions.

          2)Requires the Department of Housing and Community Development  
            (HCD) to use the COGs population projections as the basis for  
            determining regional housing needs if the Department of  
            Finance (DOF) and COG projections are within three percent.

          3)Modifies the consultation and negotiation process between HCD  
            and the COGs to seek agreement if the population projections  
            are more than three percent apart, with the DOF projections  
            being used if agreement cannot be reached.

          4)Modifies the consultation and input that COGs give HCD for  
            determining regional housing needs from population  
            projections, explicitly permits COGs to file a formal  
            objection to the draft housing need determination with HCD and  
            requires HCD to take action on the objection within 45 days.   
            These changes would provide more clarity to the process of  
            developing a methodology to determine regional housing needs  
            and in resolving disputes over projected regional housing  
            needs.









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          5)Allows HCD to extend deadlines by up to 60 days for COGs to  
            determine the regional need and for cities and counties to  
            adopt housing elements to accommodate the release of  
            demographic information from the Census Bureau or DOF.

          6)Clarifies that a COG or the department may reduce the regional  
            housing need for a county at any time between the acceptance  
            by HCD of the COG regional housing need allocation plan and  
            the due date of the subsequent allocation plan for the next  
            planning cycle.  Existing law is unclear about the eligible  
            period for such a reduction.

          7) Requires HCD to consider, when HCD determines and distributes  
            projected housing need to cities and counties that do not  
            belong to a COG, agreements between a county and its cities to  
            direct growth toward incorporated areas.  This provision  
            responds to the concern that state housing element law should  
            respect the interest of some communities to minimize growth in  
            unincorporated areas.

          8)Requires HCD's final determination to be in writing when a  
            city or county that does not belong to a COG requests a  
            revision of projected housing need.  This provision responds  
            to  local governments desire to receive additional clarity  
            from HCD about the department's review standards.

          9)Requires COGs to survey communities on their opportunities and  
            constraints to new development.  The information from the  
            survey must be used as source information for the allocation.   
            This provision would provide more information to the COGs  
            about local conditions prior to the COGs distributing  
            projected housing need to each city and county.

          10)Requires COGs to include additional factors in the  
            methodology to allocate housing needs, such as a) jobs/housing  
            balance; b) state and federal lands unavailable for  
            development; c) state or federal limitations on providing  
            infrastructure; d) county policies to protect prime  
            agricultural land or direct growth towards incorporated areas;  
            e) past performance of housing development; f) lands preserved  
            or protected from urban development under existing federal or  
            state programs designed to protect open space, farmland,  
            environmental habitats, and natural resources on a long-term  
            basis; and g) distribution of growth assumed for  
            transportation planning purposes.  This provision would  








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            require consideration of local factors and constraints when  
            COGs are developing their methodologies.

          11)Modifies the process that allows subregions to decide their  
            own allocations, which is intended to encourage subregions to  
            begin working earlier to plan for the next cycle, to ensure  
            that the subregions have a majority of support from the member  
            local governments and to allow more flexibility in the  
            combinations of local governments that can form a subregion.

          12)Modifies the process whereby a local government can appeal to  
            the COG to reduce a housing allocation.  Includes a  
            requirement that COGs reallocate units from appeals to all  
            jurisdictions proportionally if the reallocated amount is less  
            than seven percent of the regional total, or to develop a  
            methodology if the reallocated amount exceeds seven percent of  
            the regional total.   The proportional distribution would  
            reduce the difficulty for COGs to decide where to reallocate  
            units when a local government successfully appeals an  
            allocation.

          13)Establishes a standard process for public review and comment  
            during the local government's draft phase of a housing  
            element.  Such a process does not exist in existing law.

          14)Precludes third party comments to HCD if the comments had not  
            been raised in the required  public review and comment process  
            held by the local government when drafting the housing  
            element.  Also requires HCD to provide the local government  
            with a copy of any comments received and a list of the persons  
            who were consulted by the department.  These provisions  
            respond to a local government concern that third parties  
            unknown to the local government currently can raise issues  
            with HCD that may have not been raised previously through the  
            public review and comment process.

          15)Requires HCD to include in its written findings on a draft  
            housing element the information that supports and explains  
            each of its findings.  This provision responds to a local  
            government desire to receive more clarity from HCD on the  
            department's standards for evaluating housing elements.

          16)Requires that local governments implement all the programs in  
            their housing element by the date they have specified in the  
            housing element.  Existing law does not require local  








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            government to take implement actions by a specific date.

          17)Allows HCD to rescind approval of a housing element if the  
            community fails to implement the programs that the approval  
            was specifically conditioned on.  The community would have an  
            opportunity to show that they didn't need the programs or have  
            taken alternative measures to mitigate the impacts.  This  
            provision would provide clarity and limits to an authority  
            that HCD has exercised in the past.

          18)Allows communities to file a writ of mandate action within 45  
            days to challenge an HCD disapproval or rescission of a  
            housing element in court.  This process responds to the  
            concern of nonprofit housing advocates that they do not have  
            the financial resources to take legal action against local  
            governments that are in violation of housing element law.  The  
            process also responds to the concern from local government  
            that a neutral third party is needed to resolve disagreements  
            between HCD and local governments, particularly when penalties  
            are at stake.

          19)Requires the court to hold a hearing on the action within 90  
            days and issue a final decision within an additional 30 days.  
            If the community prevails, HCD would have 60 days to revise  
            its findings in compliance with the law.  If the court upheld  
            HCD's action, the court would order the community to adopt an  
            HCD-approved housing element within 120 days.  In either case  
            the court would retain jurisdiction to ensure the orders are  
            followed.  This provision differs from the previously amended  
            version of SB 910, which would have allowed the court to award  
            reasonable attorney's fees to the plaintiff and to levy  
            penalties upon the local government.

          20)Requires the State Controller to levy an unspecified fine if  
            a community didn't submit an element within six months of the  
            deadline; didn't challenge a disapproval or rescission within  
            45 days; or lost in court and had not revised their housing  
            element within 120 days to meet HCD's approval.  The fines  
            would go to HCD for rental housing in the region.  This  
            provision differs from the previously amended version of SB  
            910, which would have allowed the Controller to withhold  
            transportation funding from a local government if the local  
            government did not adopt a housing element in two consecutive  
            cycles that HCD found to be in substantial compliance with the  
            law.








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          21)Requires the State Controller to deduct an amount equivalent  
            to the fine from state subventions if a community does not pay  
            the fine.
           
           EXISTING LAW  :

          1)States the intent of the Legislature to ensure that local  
            governments recognize their responsibility in achieving the  
            state housing goal and adequately plan and take steps to meet  
            those goals. (Government Code Section 65581)

          2)Requires the planning agency of each city and county to adopt  
            a general plan "to guide the future growth of a community"  
            containing various elements including a housing element.   
            (Government Code Sections 65300 and 65302)

          3)Requires the housing element of a city or county to identify  
            and analyze current and projected housing needs, make  
            demographic projections, assess housing inventories, identify  
            housing constraints, analyze opportunities for energy  
            efficiency, and establish community goals related to housing  
            for all income levels.  (Government Code Section 65583)

          4)Each community's identification of adequate sites must satisfy  
            the housing allocation targets set by the COG (see #6 below).  
            (Government Code Section 65584)

          5)Requires a city or county to review their housing element  
            pursuant to a set schedule but not less than every five years.  
             The review shall assess the effectiveness of the housing  
            element and the progress in implementation by the city or  
            county.  (Government Code Section 65588.)

          6)Requires prior to each revision, each COG, in conjunction with  
            HCD, prepares a regional housing needs assessment and allocate  
            to each jurisdiction in the region its fair share of the  
            housing need for all income categories. Where COGs do not  
            exist, HCD shall determine the local share of the region's  
            housing need. (Government Code Section 65584)

          7)Allows a city or county to adopt a housing element that is not  
            in compliance as determined by HCD if the city or county makes  
            written findings as to why it believes the housing element is  
            in compliance. (Government Code Section  65585)








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          8)Allows an interested party to challenge the conformity of a  
            housing element and for a court to order a city or county to  
            take action within 60 days to achieve compliance. (Government  
            Code Section 65587)

           FISCAL EFFECT  :  Unknown

           COMMENTS  :   This bill has been double referred to the Committees  
          on Local Government, as well as Housing and Community  
          Development.

          1)State housing element law background. Enacted in 1980, the  
            state's foremost housing planning statute requires that local  
            governments prepare a housing element as one of seven required  
            elements in a local general plan (Government Code, Sections  
            65580-65589.8). The housing element is the only general plan  
            element that the state requires local governments to update on  
            a regular cycle, and the only element that must be reviewed  
            and approved by a state agency.  State housing element law  
            compels local governments to plan for sufficient housing  
            affordable to all income levels, including lower-income  
            households. 

          2)Housing element has been controversial.  Housing element law  
            has a history of controversy. Housing advocates contend that  
            the law places the burden of enforcement on the limited  
            resources of nonprofit organizations and that the law lacks  
            adequate consequences for local governments that do not  
            receive HCD certification for their housing elements.  Many  
            local governments, on the other hand, contend that the law  
            creates unrealistic expectations about the amount of housing  
            that can be built in a community, that the standards for  
            obtaining HCD approval are murky, that the law does not  
            adequately consider local constraints to housing, that the law  
            does not balance the need for housing with other state policy  
            objectives and that the state does not provide adequate  
            incentives to actually get housing built.  

          3)SB 910 originally focused on consequences.  As passed by the  
            Senate, SB 910 sought to increase the consequences for local  
            governments that did not receive certification of their  
            housing element by HCD.  HCD says that 30 percent of local  
            governments have not received certification of their housing  
            element.  The author contends that, by shirking their  








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            responsibility to make land available for their fair share of  
            the region's housing needs, local governments effectively  
            raise the price of housing for working families and force  
            surrounding jurisdictions to take on a larger housing burden.

          4)SB 910 has been amended to reflect negotiations.  At the  
            suggestion of the chairs of the Assembly Local Government  
            Committee and Assembly Housing and Community Development  
            Committee, the author of SB 910 agreed to forego a hearing on  
            the bill last year to allow the formation of a working group  
            to negotiate a number of the controversial issues surrounding  
            the housing element.   The working group includes  
            representatives from Assembly Local Government Committee,  
            Assembly Housing and Community Development Committee, Senate  
            Housing and Community Development Committee, cities, counties,  
            councils of governments, local government planners, housing  
            advocacy organizations, homebuilders, the Department of  
            Housing and Community Development and environmental  
            organizations.  SB 910 was amended on May 30 to reflect the  
            general consensus that has emerged from the working group  
            discussions, although there are still some in the working  
            group who have reservations about some of the language in the  
            amended bill.  The amended bill is the most comprehensive  
            overhaul of the housing element statute since the law was  
            passed in 1980.

          5)Several issues still need to be addressed.   While the working  
            group has reached agreement on many issues, several unresolved  
            matters remain.  Participants have agreed to continue  
            negotiating toward resolution of the outstanding issues.   
            Unresolved matters include:

              a)   Should HCD be granted the authority to rescind  
               certification of a housing element under certain  
               conditions  ?  HCD has rescinded certification in the past.   
               For example, HCD rescinded Napa County's certification in  
               1992 when the incorporation of the City of American Canyon  
               removed land from the county's jurisdiction that had been  
               zoned for housing.  The question before the working group  
               is whether HCD should be granted the explicit authority in  
               statute to rescind a housing element when unforeseen  
               conditions arise after certification that substantially  
               undermine the basis for the certification.

              b)   What should be the standard of proof in a court hearing  








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               to resolve a dispute between a local government and HCD  
               over housing element certification  ?
           
             c)   Should the court be authorized to award reasonable  
               attorney's fees to any intervenor to a judicial review  
               involving a local government and HCD should the court find  
               in the department's favor  ? 

              d)   What should be the level and nature of fines for a local  
               government that both does not have a certified housing  
               element and has not pursued resolution of disagreements  
               with HCD by judicial review  ?

            In addition to the above issues, representatives from local  
            government have been discussing a number of issues directly  
            with HCD on the department's procedures in reviewing housing  
            elements.  The local government representatives indicate that  
            they intend to bring some of those issues before the working  
            group.

          6)Technical amendments.  Several minor amendments are needed to  
            address section numbering and cross-referencing errors.
           
          REGISTERED SUPPORT / OPPOSITION  :

           Support 
           
            Significant support for the bill in previous amended versions,  
          but no letters were received on the bill in its current form by  
          the committee analysis deadline.
           
          Opposition 
           
            Significant opposition to the bill in previous amended versions,  
          but no letters were received on the bill in its current form by  
          the committee analysis deadline.
           

          Analysis Prepared by  :    Dan Flynn  / L. GOV. / (916) 319-3958