BILL ANALYSIS                                                                                                                                                                                                    






           SENATE TRANSPORTATION & HOUSING COMMITTEE       BILL NO: sb 326
          SENATOR ALAN LOWENTHAL, CHAIRMAN               AUTHOR:  strickland
                                                         VERSION: 4/13/09
          Analysis by: Mark Stivers                      FISCAL:  yes
          Hearing date: April 28, 2009








          SUBJECT:

          Housing elements and foreclosures

          DESCRIPTION:

          This bill requires cities and counties to include within the  
          housing needs assessment portion of their housing elements a  
          quantification of their existing and projected foreclosure rates  
          and an analysis of the impact of foreclosures on housing needs.

          ANALYSIS:

          The Planning and Zoning Law requires cities and counties to  
          prepare and adopt a general plan, including a housing element,  
          to guide the future growth of a community.  Following a  
          staggered statutory schedule, cities and counties located within  
          the territory of a metropolitan planning organization (MPO) must  
          revise their housing elements every eight years, and cities and  
          counties in rural non-MPO regions must revise their housing  
          elements every five years.  Before each revision, each community  
          is assigned its fair share of housing for each income category  
          through the regional housing needs assessment (RHNA) process.  A  
          housing element must identify and analyze existing and projected  
          housing needs, identify adequate sites with appropriate zoning  
          to meet its share of the RHNA, and ensure that regulatory  
          systems provide opportunities for, and do not unduly constrain,  
          housing development.  The Department of Housing and Community  
          Development (HCD) reviews both draft and adopted housing  
          elements to determine whether or not they are in substantial  
          compliance with the law.  

           This bill  requires cities and counties to include within the  




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          housing needs assessment portion of their housing elements a  
          quantification of their existing and projected foreclosure rates  
          and an analysis of the impact of foreclosures on housing needs.
          
          COMMENTS:

           1.Purpose of the bill  .  Foreclosure rates are at historic highs,  
            and with the recession and banks tightening their lending  
            guidelines, many foreclosed homes cannot be sold.  These homes  
            are generally left vacant and can become a blight on the  
            community.  They can also become a magnet for crime.  By  
            requiring cities and counties to analyze the impact of  
            foreclosures, this bill seeks to facilitate local efforts to  
            address the impacts.  

           2.Already allowed but not required  .  While housing element law  
            does specify a number of items that must be included within  
            the housing needs assessment portion of a city or county's  
            housing element, nothing prevents a city or county from adding  
            additional data or analysis that is relevant to the  
            jurisdiction's housing needs.  As a result, cities and  
            counties may already quantify the level of foreclosures and  
            analyze its impact on housing needs as part of the housing  
            element.  This bill simply requires such an analysis. 

           3.A cyclical concern  .  Historically, foreclosure rates have  
            averaged about one percent.  While this average masks a fairly  
            large degree of variation from year to year, it is generally  
            only during times of economic stress or recession that high  
            rates of foreclosure cause concern from a public policy  
            perspective.  Over the last 30 years in California,  
            foreclosure rates have hit or exceeded two percent only during  
            the recession of the mid 1990s and now.  A housing element  
            covers an eight-year planning period in most cases.  It is not  
            clear how the quantification and analysis of foreclosure rates  
            at a point in time when the housing element is being developed  
            will inform decisions regarding medium-term housing programs  
            and planning.

           4.Projecting foreclosure rates  .  This bill requires cities and  
            counties to quantify their projected foreclosure rates.  While  
            cities and counties can probably obtain such projections  
            readily from various sources, it is not clear that their  
            accuracy can be relied on over the medium term.  For example,  
            most projections available in 2006 probably did not come close  
            to predicting the foreclosure rates that developed in 2008 and  




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            2009, if they even predicted an increase at all. 
          
          POSITIONS:  (Communicated to the Committee before noon on  
          Wednesday,
                     April 22, 2009)

               SUPPORT:  County of Santa Barbara (sponsor)

               OPPOSED:  None received.