BILL ANALYSIS SB 910 Page 1 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. SB 910 Page 2 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 SB 910 Page 3 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 SB 910 Page 4 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. SB 910 Page 5 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) SB 910 Page 6 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 SB 910 Page 7 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 SB 910 Page 8 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