BILL ANALYSIS SB 303 SENATE COMMITTEE ON ENVIRONMENTAL QUALITY Senator S. Joseph Simitian, Chairman 2007-2008 Regular Session BILL NO: SB 303 AUTHOR: Ducheny AMENDED: April 18, 2007 FISCAL: Yes HEARING DATE: April 23, 2007 URGENCY: No CONSULTANT: Randy Pestor SUBJECT : PLANNING, CEQA, AND ENVIRONMENTAL ISSUES SUMMARY : Existing law : 1) Under the California Constitution, authorizes a city or county to "make and enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict with general law." 2) Under Planning and Zoning Law, requires cities and counties to adopt a general plan that includes seven mandated elements (land use, circulation, housing, conservation, open space, noise, safety), and creates special requirements for housing elements. It also requires cities and counties to adopt zoning ordinances regulating, for example, the use of buildings, structures, and land. 3) Under the California Environmental Quality Act (CEQA), requires lead agencies with the principal responsibility for carrying out or approving a proposed discretionary project to prepare a negative declaration, mitigated declaration, or environmental impact report (EIR) for this action, unless the project is exempt from CEQA (CEQA includes various statutory exemptions, as well as categorical exemptions in the CEQA guidelines). 4) Under the Permit Streamlining Act (PSA), requires a lead agency for a development project to approve or disapprove a project within specified time periods (for example, 180 days from the date the lead agency certifies an EIR (except 90 days for a very low or low income housing project under SB 303 Page 2 certain conditions), 60 days from the date of adopting a negative declaration or determining that a project is exempt from CEQA). This bill : 1) Under Planning and Zoning Law, requires the general plan to encompass a 20-year planning period (except for the current requirement to update the housing element to cover a 5-year period) and requires each general plan element to be updated as necessary not less than every 10 years. Under Planning and Zoning Law requirements for the housing element, this bill: a) Requires the housing needs quantified objectives to "establish," rather than "estimate," the maximum number of housing units to be constructed and rehabilitated for certain income categories over a 10-year period, rather than the current 5-year period requirement. (65583(b)(2)). b) Requires a city council or board of supervisors to designate in its housing element sufficient land and to zone sites for residential use to accommodate the jurisdiction's 10-year housing need. The obligation to designate sites for the region's 10-year lower income household housing need must be satisfied to allow the minimum number of units per acre, as specified. The local government must prepare an EIR in connection with the designation of sites. (65583.3(a)). c) Requires actions to be taken to make sites available with appropriate zoning during the "first year of the planning period" (rather than for the housing element planning period) for the jurisdiction's share of the regional housing need for each income level. (65583(c)(1)(A)). d) Requires the housing element program to identify sites that "shall be made available" (rather than "can be developed") during the "first year of the planning period" (rather than the housing element planning period). 65583(c)(1)(C). The program must also specify SB 303 Page 3 the date by which each action in the program must be implemented. (65583(c)(7)). e) Requires sites to be identified for lower income households that meet certain densities (rather than current provisions where these densities are "deemed appropriate" and must be based upon an analysis of such factors as market demand and financial feasibility). This bill also requires that these sites are not planned for nonresidential development or development with housing for non-lower income households. 65583.2(c)(2). f) Requires the rental housing "by right" provisions to apply "during the first year of the planning period" (rather than during the housing element planning period). (65583.2(h)). "By right" means the local agency's review of a residential use cannot require a discretionary review or approval that constitutes a project under CEQA. g) Prohibits a zone change for residential use without the consent of the project applicant, except by a 4/5 vote of the city council or board of supervisors when a complete application has been submitted to develop a project and the project is consistent with zoning applicable to the site. An abstention cannot count as an affirmative vote. (65583(c)). h) Requires a court, if the court finds that a local government failed to comply with the requirements of 65583(a), to retain jurisdiction of an action and issue an order requiring compliance with 65583(a) within 120 days, or a lesser period if the court determines that a lesser period is appropriate. (65583(d)). i) Requires a city or county, within one year after the date of revising the housing element, to submit written documentation to the Department of Housing and Community Development (HCD) regarding actions to comply with the one-year zoning requirements in this bill, and HCD must review the submittal and report its written findings to the jurisdiction within 30 days. If HCD finds that the SB 303 Page 4 jurisdiction failed to substantially comply with the one-year zoning requirement, then HCD must notify the jurisdiction that its housing element does not comply with the requirements. Legislative intent declares that these findings be given substantial deference and weight by courts regarding noncompliance with housing element requirements. (65585). j) Changes deadlines for revising housing elements, with unspecified dates, by requiring the five-year update to include amendments to ensure sites are designated and zoned to accommodate the jurisdiction's 10-year housing need. (65588). aa) Provides that all deadlines in the housing element law are mandatory and not directory. (65588.2). bb) Provides that nothing in the housing element requirements can be interpreted to affect current law with respect to planning, use, or development of areas outside designated and zoned housing sites, or to establish any presumption regarding the appropriate designation or use of those sites. (65588.3). cc) Requires any approval in connection with a project that is consistent with the zoning designation, or identified in an inventory or subject to the "by right" provisions, is subject to the Permit Streamlining Act. (65583.3(b)). 2) Requires a zoning ordinance to be consistent with a city or county general plan if certain conditions are met, such as the zoning ordinance "allows development at the density range without the need for any additional land use approval that is legislative or quasi-legislative in nature." (65860(a)(3)). 3) Authorizes a property owner to bring an action requiring that zoning its property be made consistent with the general plan. (65860(b)). 4) Requires zoning consistency requirements to apply to SB 303 Page 5 charter cities (Los Angeles is the only charter city subject to the consistency requirement under current law). (65860(c)). 5) Provides legislative intent that the Court of Appeal opinion in Mira Development Corporation of San Diego v. City of San Diego (1988) 205 Cal.App.3d 1201, is inconsistent with the Legislature's intent that: a) the phrase "health and safety" be narrowly construed, and b) substantial evidence in support of a health and safety finding be of ponderable legal significance, reasonable in nature, credible, and of solid value in light of all of the evidence in the record. (SEC. 12). COMMENTS : 1) Purpose of Bill . According to the author, the main reason for a lack of housing is a local government planning process that is broken, and this bill "would require every California city's general plan to encompass a planning and projection period of 20 years and set aside enough land with appropriate zoning to supply housing at all income levels for the projected population growth." 2) Zoning requirements . SB 303 requires local agencies to designate and zone sites to accommodate housing for ten years (although there is a conflict in this bill regarding a 10-year or 5-year period on page 16, lines 9 to 19). This bill also requires a local agency to zone sites for residential uses within one year, rather than for the housing element planning period, and requires the zoning consistency under current law to apply to charter cities. Requiring zoning to occur within one year is likely infeasible, and may exceed planning resources, for many local governments. This bill should provide for the zoning requirement to: a) be done over the 5-year housing element period to enable phasing; and b) provide a shorter period for subsequent housing element updates, such as 3 years, while also allowing for phasing of development in those areas. SB 303 Page 6 Charter cities that have not been subject to the requirement for zoning consistency and are likely to have many infill opportunities, should be given additional time during the first five-year planning period to meet the zoning requirement Other provisions of SB 303 relating to this one-year period, such as "making sites available," application of "by right" requirements, and similar references, need to be consistent with the above changes to the zoning provisions. Finally, it would be inappropriate to enable property owners to bring actions requiring zoning on their property to be made consistent with a general plan, as provided under this bill, given the above time constraints. 3) Location of housing . Assuring adequate housing for California's future is a worthy goal; the issue is where should such housing be located and how should the need for housing be balanced against other worthwhile goals (for example, preservation of land for agriculture, an important element of California's economy, and open space)? This bill should be amended to specify that, in making the designations required by SB 303, local agencies must give preference to locating housing on infill, redevelopment, and brownfield sites before looking to open space and greenfield sites as a source of land to satisfy the state's projected housing needs. Moreover, it should be these preferred locations for housing that receive the preferential treatment contemplated by SB 303, not greenfield sites. 4) Supermajority voting requirement . SB 303 prohibits a zone change for residential use without the consent of the project applicant, except by a 4/5 vote of the city council or board of supervisors when a complete application has been submitted to develop a project and the project is consistent with zoning applicable to the site. SB 303 further requires that any zone change can only be done after making findings that are very difficult to make. An abstention cannot count as an affirmative vote. SB 303 Page 7 This provision is problematic and should be stricken because: a) there is no known requirement for a 4/5 vote in Planning and Zoning Law and this may also be interpreted to be undemocratic; b) the project applicant is subject to a majority vote; c) it would not be possible to rezone the property for subsequent housing element updates; and d) a local official can be legally disqualified within the meaning of the Political Reform Act, which may be an additional hurdle to change zoning. 5) Financing . Updating a general plan every 10 years involves considerable expense for local agencies. For example, the League of California Cities estimates that the cost of this process is likely to exceed $300 million per cycle in today's dollars. SB 303 proposes that this cost be recouped through fees imposed at the local level, which require their own costly process to document the requisite relationship between the amount of the fee and the cost of the service being provided. If the purpose of this bill is to promote the construction of low and moderate income housing (or at least not to further deepen affordability challenges), the financing mechanism should be structured so it is not passed through to lower income housing purchasers. One mechanism is to impose the fee on those that generate the need for additional housing, similar to the approach upheld in Commercial Builders of Northern California v. City of Sacramento (9th Cir. 1991) 941 F.2d 872, which conditioned development of non-residential property on payment of a fee to offset the costs of providing affordable housing to those who will work there. HCD could be tasked with documenting the required nexus between non-residential development and housing demand to support this fee (which would cost less and be more efficient than having all local jurisdictions undertake such studies). Another funding mechanism would be parallel to the Strong Motion Instrumentation and Seismic Hazards Mapping programs, where cities and counties collect a fee from each building permit applicant to fund programs for installing SB 303 Page 8 strong motion instruments on structures and to develop hazard mapping. 6) The general plan as an integrated and comprehensive document . SB 303 creates a series of stringent protections for land designated for housing. A general plan, however, represents a comprehensive vision for the community, including for example, the value of preserving some lands for conservation and open space. The various protections SB 303 affords for lands designated for housing in an agencies' planning documents should be also extended to lands designated for conservation, open space, and agriculture, and related uses. To ensure that there is parity between the general plan housing element requirement and those for a local agency's conservation and open space elements, SB 303 would need several amendments, including: a) a requirement to update conservation and open space elements every 5 years; b) a program to identify the regional need for open space, parks, agriculture, and similar uses; c) a requirement to analyze open space and park needs for lower income households, and to provide open spaces and parks for these households; and d) a requirement to identify policies and incentives that promote and protect open space, parks, agriculture and similar uses. If requirements remain in this bill for supermajority voting, residential uses without any further legislative or quasi-legislative action, and increased state oversight, then comparable amendments for conservation and open space actions would also be needed. If a financing provision is added to this bill, then a similar funding mechanism would need to be provided for conservation and open space related requirements. 7) Consistency Requirements . SB 303 provides that a zoning ordinance is consistent with a general plan in the case of residential uses if the zoning ordinance "allows development at the density range without the need for any additional land use approval that is legislative or quasi-legislative in nature." (65860(a)(3)). This is inconsistent with current law where zoning is consistent SB 303 Page 9 with the general plan when "various land uses authorized by the [zoning] ordinance are compatible with the objectives, policies, general land uses, and programs specified in the plan" (65860(a)), and would thereby preclude a local government from considering policies relating to, for example, certain environmental and infrastructure issues. This is a significant conflict with current law and should be stricken. 8) Limiting land available for workforce housing . Section 65583.2(c)(2)'s requirement that "sites identified to accommodate housing for lower income households shall be sites that are not already planned for nonresidential development or development with housing for non-lower income households . . ." creates a significant impediment to zoning for affordable housing by taking sites that are planned for non-residential and market-rate housing out of consideration for designation as workforce housing. This seems fundamentally inconsistent with state policies promoting affordable housing for California's workforce. It also appears to create a policy that segregates workforce housing from other forms of housing and development. 9) Increased reporting and oversight functions . Current law requires local governments to provide an annual report to the Office of Planning and Research (OPR) and HCD regarding certain general plan matters, including a requirement for a housing element portion of this annual report (Government Code 65400). SB 303 adds additional reporting requirements that must be provided to HCD one year after revision of the housing element (Government Code 65585). HCD must review the report within 30 days, receive written comments from other agencies or persons, and determine whether the local government has substantially complied with certain housing element requirements. Because the one year zoning requirements under this bill are infeasible (see Comment #2), any reporting requirement should be at a later date. There should also be an opportunity for the local government to respond to HCD's SB 303 Page 10 findings. 10)Affecting CEQA . SB 303 limits application of CEQA by, for example: a) requiring zoning to allow development in the specified density range "without the need for any additional land use approval that is legislative or quasi-legislative in nature;" b) requiring changes to be subject to written findings pursuant to 65589(d) or (j); c) requiring a supermajority 4/5 vote to change zoning; d) limiting the holding in the Mira case (see Comment #12); and e) the limited one-year zoning requirement. To ensure that application of CEQA to the planning process is not limited or affected, provisions such as those cited above, must be stricken (and in the case of the one-year zoning requirement, extending that period as provided under Comment #2). 11)Permit Streamling Act amendments . Time limits in the PSA relate to determining the completeness of applications and reaching decisions on development projects. Time limits have also been enacted under CEQA for completing environmental documents and executing contracts for their preparation. PSA deadlines do not apply to certain actions, such as legislative actions (adoption or amendment of a general plan or zoning ordinance) legislative actions that are combined with adjudicatory permits, compliance with federal requirements with longer time schedules, and certain other actions (administrative appeals, applications to appropriate water). SB 303 requires any approval in connection with a project that is consistent with the site designation and zoning to be subject to the PSA, as well as zoning sites during the bill's one-year period and "by right" zoned sites process. This change is inappropriate because: a) it has been held in Landi v. County of Monterey , 139 Cal.App.3d 934, 937 (1983), that the PSA was not meant to impose a rigorous timetable on a local government's exercise of its policy-making "legislative" powers, but only the exercise of its "adjudicatory" powers; and b) other actions involved in the amendment are initiated by the local agency, not by SB 303 Page 11 an applicant. Therefore, the PSA provisions in this bill should be stricken. 12)Overturning Mira . Section 12 of the bill appears to be an effort to overturn at least a portion of the court's holdings in Mira Development Corporation of San Diego v. City of San Diego (1988, reported at 205 Cal.App.3d 1201), a nearly 20-year old case that upheld a local agency's denial of a rezoning application because of school overcrowding concerns. This bill apparently wants to prevent such decisions in the future by: a) expressing legislative intent that the phrase "health and safety" should be construed narrowly, and b) creating an uncodified standard for substantial evidence when making health and safety findings ("substantial evidence in support of a health and safety finding be of ponderable legal significance, reasonable in nature, credible, and of solid value in light of all of the evidence in the record"). There are problems with this provision because: a) Case law that says that legislative expressions of the intent of an earlier legislative act (in this case, the 1982 Legislature's act in adopting Government Code section 65589.5) are not binding on the courts. See, for example, Parnell v. Adventist Health System/West, (2005) 35 Cal. 4th 595 (citing Eu v. Chacon (1976)), 16 Cal.3d 465; Del Costello v. State of California (1982) 135 Cal.App.3d 887, 893 (finding the Legislature has no authority to interpret a statute or declare what it did mean; instead it must define the meaning of statute by present statutory enactment). This is consistent with the California Constitution's requirement that a statute may not be amended unless the section is re-enacted as amended. See Cal. Const. art. 4, 8. If the bill's proponents want to clarify the standards for health and safety and substantial evidence for purposes of Government Code section 65589.5, they should do so explicitly in that section's definitions section (subdivision (h)). b) It is not clear what this new standard of substantial SB 303 Page 12 evidence means. Some courts have already used the standard articulated in the bill as a definition of substantial evidence for purposes of administrative mandamus and CEQA review. See American Canyon Community United for Responsible Growth (2006) 145 Cal.App.4th 1062, 1069-70 ("Substantial evidence is evidence of ponderable legal significance, reasonable in nature, credible, and of solid value, evidence that a reasonable mind might accept as adequate to support a conclusion."). A legislative declaration that such a definition of substantial evidence only applies with respect to health and safety findings creates the inference that such a definition is not a valid definition of substantial evidence generally. Is this the argument that the bill's sponsors want to make? Even if they do, saying so in such an indirect fashion and in an uncodified section is likely to invite litigation. c) Most importantly, there is also the policy issue of whether the Legislature should further erode local agencies' consideration of health and safety factors, including school overcrowding, in determining whether to rezone property (the situation in Mira ). By declaring that Mira "is inconsistent with the Legislature's intent," the Legislature would further limit local government's ability to direct where development should occur in a jurisdiction. To ensure that project impacts are properly mitigated, this provision should be stricken (as also noted under Comment #10). 13)Where's the state plan ? AB 857 (Wiggins/Sher) Chapter 1016, Statutes of 2002, requires the Governor to annually submit (with the Budget) a proposed five-year infrastructure plan. The plan must include criteria and priorities used to identify and select the infrastructure proposed for funding and must specify sources of funding, an evaluation of the impact of new state debt on the state's existing overall debt position, and recommend specific projects for funding. These state planning SB 303 Page 13 priorities are intended to promote equity, strengthen the economy, protect the environment, and promote public health and safety by: 1) promoting infill development and equity, 2) protecting environmental and agricultural resources, and 3) encouraging efficient development patterns. Current law requires the Governor to prepare an Environmental Goals and Policy Report (EGPR) that is an overview of "state growth and development and a statement of approved state environmental goals and objectives, including those directed to land use, population growth and distribution, development, the conservation of natural resources, and air and water quality." The EGPR must also serve as a guide for state expenditures. Although the EGPR must be revised, updated, and transmitted by the Governor to the Legislature every four years, the EGPR has not been revised since 1978 (under Governor Jerry Brown) - almost a 30-year old plan. Local governments have long been concerned that the state consistently adds new local planning requirements, yet without an updated EGPR sends mixed signals to local governments by, for example, its uncoordinated transportation, prison, higher education, farmland protection, and housing policies and actions. Is it time to focus on ensuring that the state implements AB 857 planning priorities and has an updated EGPR before enacting major changes to housing element requirements? SOURCE : California Major Builders Council SUPPORT : Access to Independence, AFSCME, Allied Housing, Alvarado & Associates, LLC, Asian Law Alliance, Asian Pacific Islander Small Business Program, Barratt American, Inc., Bethel Missionary Baptist Church, Beyond Shelter, Brehm Communities, BRIDEGE Housing, California Association of Realtors, California Black Chamber Foundation, California Building Industry Association, California Business SB 303 Page 14 Roundtable, California Chamber of Commerce, California Coalition for Rural Housing, California Federation of Teachers, Council for Environmental and Economic Balance, California Council of Churches Impact, California Housing Consortium, California State Firefighters Association, Calistoga Affordable Housing, Inc., Cal-Nevada Conference of Operating Engineers, Coalition of Women from Asia and the Middle East (CWAME), Communities Actively Living Independent & Free, Congress of California Seniors, Corman Leigh Communities, Delco Builders & Developers, Father Joe's Villages, HomeAid Northern California, Housing California, Loaves and Fishes, Los Angeles Conservation Corps, Martha's Village & Kitchen, Inc., National AIDS Foundation, Josue Homes, Neighborhood Housing Services of Orange County, Peace Officers Research Association of California, Ponderosa Homes II Inc., Sacred Heart Parish, Saint John Missionary Baptist Association, Samaritan Reach, San Diego Housing Federation, San Diego Regional Chamber of Commerce, San Diego Urban Economic Corporation, Self Help for the Elderly, Signature Properties, Solari Enterprises, Inc., St. Vincent de Paul Village, The John Stewart Company, Toussaint Youth Villages - Toussaint Teen Center, Tri-City Homeless Coalition, United California Mortgage and Financial Services, West Bay Housing Corporation SUPPORT IF AMENDED Planning and Conservation League OPPOSITION : Cities: Alhambra, Antioch, Arroyo Grande, Barstow, Bell, Bellflower, Belmont, Beverly Hills, Bishop, Brea, Buena Park, Burbank, Burlingame, Campbell, Carmel by the Sea, Cerritos, Chino, Chino Hills, Claremont, Clovis, Colton, Commerce, Compton, Daly City, SB 303 Page 15 Diamond Bar, Emeryville, Fairfield, Fontana, Fortuna, Garden Grove, Goleta, Hermosa Beach, Hesperia, Highland, Huntington Park, Inglewood, La Habra, La Mirada, La Quinta, Lafayette, Laguna Beach, Laguna Hills, Lakewood, Lancaster, Latino Caucus, League of CA Cities, Livermore, Long Beach, Marysville, Monrovia, Montclair, Monte Serano, Moorpark, Moreno Valley, Mt. Shasta, Murrieta, Norwalk, Ontario, Palo Alto, Paramount, Pasadena, Pico Rivera, Poway, Rancho Cucamonga, Rancho Palos Verdes, Redlands, Redondo Beach, Rohnert Park City Council, Roseville, Sacramento, San Bernardino, San Buenaventura, San Mateo, San Rafael, Santa Clara, Santa Fe Springs, Santa Maria, Santa Rosa, Scotts Valley, Seaside, Sebastopol, Signal Hill, Solvang, South San Francisco, Sunnyvale, Temple City, Torrance, Tustin, Vacaville, Ventura, Victorville, Walnut Creek, Watsonville, Westlake Village, Windsor, Whittier American Planning Association, California League of Conservation Voters, California State Association of Counties (concerns), Contra Costa County, Environment California, League of California Cities, Monterey County Mayors' Association, Natural Resources Defense Council, Regional Council of Rural Counties, Sierra Club California