BILL ANALYSIS                                                                                                                                                                                                    ”

                                                         VERSION: 4/25/11
          Analysis by:  Mark Stivers                     FISCAL:  No
          Hearing date:  June 14, 2011


          Statute of limitations and remedies for specified 
          housing-related challenges 


          This bill allows an entity in support of affordable housing to 
          challenge a housing element or a specified city or county 
          housing ordinance within five years of adoption.


          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 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.  These five- and eight-year periods 
          are known as the housing element planning period.

          Before each revision, each community receives 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.  Many of HCD's grant programs require a 
          city or county to have an HCD-approved housing element in order 
          to be eligible for funding.

          The Planning and Zoning Law and the Subdivision Map Act also 


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          include a number of sections governing zoning and entitlements 
          specifically related to housing, including:

           The Housing Accountability Act, which requires a city or 
            county to make one or more specified findings in order to 
            disapprove a particular housing development.
           A provision requiring cities and counties, when adopting an 
            ordinance which limits the number of housing units that may be 
            constructed on an annual basis, to make findings as to the 
            public health, safety, and welfare benefits that justify 
            reducing the housing opportunities of the region. 
           Density bonus law, which requires cities and counties to grant 
            a developer a density bonus, incentives, and concessions when 
            the developer proposes to include specified percentages of 
            affordable housing within a development. 
           The Least Cost Zoning Law, which requires cities and counties 
            to designate and zone sufficient vacant land for residential 
            use with appropriate standards to meet housing needs for all 
            income categories and to contribute to producing housing at 
            the lowest possible cost.
           A requirement that, when determining whether to approve a 
            tentative subdivision map, a city or county shall apply only 
            those ordinances, policies, and standards in effect as of the 
            date the developer's application is deemed complete.

          Prior to a recent court decision, it was understood that current 
          law (Government Code Section 65009) allowed a party to challenge 
          the adequacy of a city's or county's housing element at any time 
          during a planning period, provided that the challenger brought 
          the action "in support of or to encourage or facilitate the 
          development of housing that would increase the community's 
          supply of ›affordable] housing."  The challenging party was 
          required first to serve the city or county with a notice 
          identifying the deficiencies in the housing element.  After 60 
          days or the date on which the city or county took final action 
          in response to the notice, whichever occurred first, the 
          challenging party had one year to file the action in court.  
          This process and statute of limitations is known as the "notice 
          and accrual provision" and also applied to actions brought 
          pursuant to the housing-related statutes listed above.  

          In 2006, Urban Habitat Program brought suit to challenge the 
          City of Pleasanton's housing policies, including the city's 
          annual cap on housing permits and the city's cap on the 
          aggregate number of permissible housing units, both of which 
          Urban Habitat claimed were insufficient to allow the city to 


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          meet its RHNA obligation.  In 2008, the First District 
          California Court of Appeals issued an unpublished decision in 
          the case of Urban Habitat v. Pleasanton allowing the case to 
          proceed with respect to some causes of action but ruling that 
          the challenge to the housing element itself was time-barred.  
          The court concluded that, while the statute does not specify the 
          time within which a party must deliver the deficiency notice to 
          the city or county, it must interpret the statute as containing 
          a time limit.  The court then set the deadline for serving a 
          notice at 90 days after the legislative action to adopt the 
          housing element or ordinance at issue.

          In other words, instead of being able to initiate a challenge to 
          a deficient housing element at any time during the planning 
          period, housing advocates and other interested parties may now 
          only initiate such a challenge by submitting a deficiency notice 
          within 90 days of the housing element's adoption.

          Current law also requires a court, if it finds any portion of a 
          general plan, including a housing element, out of compliance 
          with the law, to include within its order or judgment one or 
          more of the following remedies for any or all types of 
          developments or any or all geographic segments of the city or 
          county until the city or county has complied with the law:

           Suspend the authority of the city or county to issue building 
           Suspend the authority of the city or county to grant zoning 
            changes and/or variances.
           Suspend the authority of the city or county to grant 
            subdivision map approvals.
           Mandate the approval of building permits for residential 
            housing that meet specified criteria.  
           Mandate the approval of final subdivision maps for housing 
            projects that meet specified criteria.
           Mandate the approval of tentative subdivision maps for 
            residential housing projects that meet specified criteria.

           This bill  states the intent of the Legislature to modify the 
          portion of the Urban Habitat opinion relating to the statute of 
          limitations for using the Government Code 65009 notice and 
          accrual provision, limits the applicability of the notice and 
          accrual provision, and provides a five-year time frame for 
          parties to initiate an action "in support of or to encourage or 
          facilitate the development of housing that would increase the 
          community's supply of ›affordable] housing."  Specifically, the 


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           States the intent of the Legislature to modify the court's 
            opinion in Urban Habitat Program v. City of Pleasanton with 
            respect to the interpretation of Section 65009 of the 
            Government Code.

           Removes from the current list of city or county actions that a 
            party may challenge pursuant to the Government Code 65009 
            notice and accrual provision those actions related to the 
            Housing Accountability Act, the Subdivision Map Act, and the 
            application of a Density Bonus ordinance to a particular 
            project, all of which are project-specific actions.  The bill 
            maintains the ability to use the notice and accrual provision 
            to challenge the adequacy of a city's or county's density 
            bonus ordinance generally.

           Provides that an entity bringing a challenge in support of 
            affordable housing against a city or county action relating to 
            housing element law, the Least Cost Zoning Law, annual limits 
            on housing permits, or the adequacy of a density bonus 
            ordinance may serve a deficiency notice up to five years after 
            the city's or county's action.  After 60 days or the date on 
            which the city or county takes final action in response to the 
            notice, whichever occurs first, the challenging party has one 
            year to file an action in court, except that the suit may not 
            be filed more than five years after the city's or county's 
            action.  In other words, the entity must file the suit within 
            one year of the expiration of the deficiency notice or within 
            five years of the city's or county's action, whichever occurs 

           Clarifies that in any action brought pursuant to the notice 
            and accrual provisions of Government Code Section 65009, 
            neither the court remedies described above nor any injunction 
            against the development of a housing project shall abrogate, 
            impair, or otherwise interfere with the full exercise of the 
            rights and protections granted to an applicant for a tentative 
            map or a vesting tentative map under specified provisions of 
            the Subdivision Map Act or to a developer under a specified 
            provision relating to development agreements.

           Provides that if a third-party challenges the adequacy of a 
            housing element and the court finds that the housing element 
            substantially complies with all of the requirements of housing 
            element law, the element shall be deemed to be in compliance 


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            for purposes of state housing grant programs.

           1.Purpose of the bill  .  According to the author, this bill 
            corrects a flawed court ruling that held that citizens may 
            only challenge the adequacy of a city's or county's housing 
            element for 90 days from the date of adoption.  Combined with 
            the recent change to an eight-year housing element cycle, the 
            ruling holds the potential for more than seven years of bad 
            land-use decisions with little recourse for citizen action. 

           2.Current level of housing element compliance  .  According to 
            HCD's 2010 annual housing element report to the Legislature, 
            as of December 31, 2010, only 52 percent of cities and 
            counties have adopted an HCD-approved housing element for the 
            current planning period that began in 2005 for the San Diego 
            region, 2008 for the Southern California, Fresno, Kern, and 
            Sacramento regions, and the summer of 2009 for the remaining 
            areas of the state.    
          3.The importance of being able to challenge on-going policies  .  
            Creating certainty by maintaining a short time frame for legal 
            challenges is important for individual development projects.  
            Housing elements, zoning ordinances, growth control 
            ordinances, and density bonus ordinances, on the other hand, 
            are living documents meant to guide cities' and counties' 
            current and future land use decisions.  When a housing element 
            or such an ordinance fails to comply with state law, it is 
            important that it be correctable whenever the deficiencies are 
            identified.  In recognition of the difference between specific 
            project-related decisions and general policies guiding future 
            development, this bill deletes the ability of affordable 
            housing advocates to use the Government Code 65009 notice and 
            accrual provision to challenge a project specific decision 
            under the Housing Accountability Act, the Subdivision Map Act, 
            or a density bonus ordinance while maintaining the notice and 
            accrual provision for challenging on-going policies.  

            There are also logistical reasons for an on-going enforcement 
            period for housing elements.  The state generally does not 
            enforce housing element or other affordable housing laws 
            directly.  Enforcement relies on local governments' voluntary 
            compliance with the possibility of citizen enforcement 
            actions, most often by affordable housing advocacy groups.  
            There are not many of these nonprofit organizations in the 


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            state, and their resources are spread very thin.  They simply 
            do not have the ability to monitor the adoption of all the 
            state's housing elements in real time and immediately file 
            deficiency notices.  Moreover, most of these groups are local 
            and faced with the fact that all jurisdictions within a region 
            adopt their housing elements around the same time.  The area 
            covered by the Southern California Association of Governments, 
            for instance, includes 200 jurisdictions.  As long as housing 
            element and other affordable housing laws rely on citizen 
            actions for enforcement and the resources of nonprofit citizen 
            groups are limited, effective enforcement requires allowing a 
            meaningful opportunity to raise alleged violations more than 
            90 days after adoption.  While there is no apparent policy 
            rationale for setting any time limit on such challenges, this 
            bill offers a compromise by allowing potential challengers to 
            serve a deficiency only within five years of adoption of the 
            housing element or specified ordinance.  

           4.A brief history of the statute  .  The statutory language 
            interpreted by the court and at issue in this bill was added 
            to statute by AB 998 (Waters), Chapter 1138, Statutes of 1983, 
            a bill sponsored by the League of California Cities and the 
            California Building Industry Association.  AB 998 created a 
            short statute of limitations period for land use decisions 
            generally but provided a specific exception to protect the 
            ability to challenge deficient housing elements.  The Senate 
            Housing and Land Use Committee and the Senate Third Reading 
            analysis of the bill stated that the bill:

               Specifies that for challenges in support of low- and 
               moderate-income housing requirements, the petitioner shall 
               notice local government 60 days prior to filing action.  
               The ›one-year] statute of limitations then begins on the 
               first day the legislative body fails to act.

            In the intervening 25 years prior to the Urban Habitat ruling, 
            housing advocates filed and successfully settled at least ten 
            cases in which the 60-day deficiency notice was sent more than 
            90 days after adoption of the city's or county's housing 
            element.  In none of these cases was the timeliness on the 
            advocates' suit contested.  Likewise, six bills amended other 
            portions of this statute during those intervening years, and 
            there was never any controversy surrounding the lack of a 
            deadline for housing advocates to serve a deficiency notice 
            nor any attempt to change the statute in this regard. 


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           5.Unlocking the private market  .  The purpose of housing element 
            law is to create opportunities for the private housing market 
            to function.  Builders cannot build without access to 
            appropriately zoned land, and current land use plans in many 
            cities and counties in California fail to provide sufficient 
            opportunities to accommodate projected population growth.  The 
            San Diego Association of Governments' Regional Comprehensive 
            Plan describes this typical California paradox in the 
            following way:

               Under current plans and policies, more than 90 percent of 
               ›the San Diego region's] remaining vacant land designated 
               for housing is planned for densities of less than one home 
               per acre, and most is in the rural back country areas 
               dependent upon scarce groundwater supplies.  And of the 
               remaining vacant land planned for housing in the 18 
               incorporated cities, only about seven percent is planned 
               for multifamily housing.  When taken together, the current 
               land use plans of the 19 local jurisdictions do not 
               accommodate the amount of growth anticipated in our region. 
                SANDAG's population forecast, which reflects the current 
               adopted local land use plans in the region, projects that 
               while population will increase by 37 percent by 2030, 
               housing will grow by just 30 percent.  The forecast shows 
               that if local plans are not changed, demand for housing 
               will continue to outpace the supply, just as it does today.

            Housing element law addresses this problem directly by 
            requiring cities and counties to zone land at appropriate 
            densities to accommodate the projected housing needs of all 
            income groups and to remove constraints that prevent such 
            sites from being developed at the allowed densities.  Cities 
            and counties, however, are not required to build housing 
            because that is the role of private developers.  The law holds 
            cities and counties accountable only for that which they 
            control: zoning and land use entitlements.  Without the 
            ability to enforce housing element law, the market's ability 
            to meet housing demand may well remain locked up.
          6.Key to AB 32/SB 375 implementation  .  In 2006, the Legislature 
            enacted AB 32 (NuŮez), Chapter 488, the Global Warming Act of 
            2006, which requires the Air Resources Board to establish a 
            statewide greenhouse gas emissions limit such that by 2020 
            California reduces its greenhouse gas emissions to the level 
            they were in 1990.  One of the key strategies to achieve the 
            AB 32 mandate is to promote more compact forms of development 


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            in California.  In 2008, the Legislature enacted SB 375 
            (Steinberg), Chapter 728, which requires the Air Resources 
            Board to provide each major region of the state with 
            greenhouse gas emission reduction targets for the automobile 
            and light truck sector and requires the regional 
            transportation plan to include a Sustainable Communities 
            Strategy (SCS), including a regional land use plan, designed 
            to achieve the targets for greenhouse gas emission reduction.  
            Regional transportation planning agencies, however, do not 
            have land use powers.  To achieve the land use vision laid out 
            in the SCS, cities and counties must alter their general plans 
            and zoning ordinances to allow the types of development the 
            SCS contemplates.  These city and county actions are 
            voluntary, however.  SB 375 contains no requirement for a city 
            or county to conform its land use plans to the SCS.  

            Because a region's RHNA housing need allocation must be 
            consistent with the SCS, because housing element law requires 
            cities and counties to identify adequately zones sites or 
            rezone land to accommodate lower-income housing, and because 
            density is the proxy for affordability, housing element law is 
            currently the only tool to get cities and counties to increase 
            allowable housing densities needed to achieve the SB 375 
            regional greenhouse gas emission reduction targets.  Without 
            an effective way to enforce housing element law, the only tool 
            to effectively ensure implementation of SB 375 at the local 
            level is lost.
           7.Arguments in opposition  .  Local government opponents believe a 
            five-year statute of limitation is too long and that this bill 
            will encourage a broad array of expensive lawsuits that do not 
            differentiate between major non-compliance with state law or a 
            small difference in interpretation.  They believe that this 
            additional legal exposure is especially unwarranted at a time 
            when they are facing significant fiscal pressures.  They 
            argue, moreover, that the challenges allowed by this bill do 
            not mandate approval of actual housing projects but only 
            require a change in a planning document.  

            The Civil Justice Association opposes lengthening statutes of 
            limitations generally.  They believe memories fade, witnesses 
            become difficult to locate, and courts are less likely to be 
            fair.  Moreover, short statutes of limitations encourage the 
            diligent settling of claims.  
           8.Previous legislation  .  Last year, the Legislature approved a 


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            bill, AB 602 (Feuer), that was identical to this bill.  
            Governor Schwarzenegger vetoed AB 602, stating:

               Local governments face numerous potential legal liabilities 
               when land is developed.  One of the protections and 
               assurances provided to local governments in order to 
               encourage them to move forward with land development is 
               that there is a reasonable statute of limitations on when a 
               legal claim can be filed.  Existing law gives interested 
               parties sufficient time to bring an action, and extending 
               this period to five years could result in uncertainty for 
               local governments.

          Assembly Votes:
               L Gov:  5-3                       
               HCD:    5-2

          POSITIONS:  (Communicated to the Committee before noon on 
                     June 8, 2011)

               SUPPORT:  California Rural Legal Assistance Foundation 
                         Housing California (sponsor)
                         The Arc of California
                         Bay Area Council
                         California Association of Realtors
                         California Coalition for Rural Housing
                         Century Housing Corporation
                         Community Housing Improvement Program
                         Congress of California Seniors
                         Corporation for Supportive Housing
                         Desert Manna
                         Los Angeles Homeless Services Authority
                         Mammoth Lakes Housing Inc.
                         Mercy Housing
                         Natural Resources Defense Council
                         Public Advocates
                         San Diego Housing Federation
                         Self-Help Enterprises
                         Silicon Valley Leadership Group
                         Sonoma County Task Force for the Homeless
                         Southern California Association of Non-Profit 


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                         United Cerebral Palsy
                         Urban Habitat
                         Western Center on Law and Poverty

               OPPOSED:  American Council of Engineering Companies of 
                         American Planning Association, California Chapter
                         Association of California Cities - Orange County
                         California State Association of Counties
                         City of Brea
                         City of Carlsbad
                         City of Cypress
                         City of Eastvale
                         City of Fullerton
                         City of Mission Viejo 
                         City of Whittier
                         Civil Justice Association of California
                         County of Marin
                         County of Orange
                         County of San Diego 
                         County of Santa Clara
                         County of Tulare
                         League of California Cities
                         Los Angeles Division of the League of California 
                         Regional Council of Rural Counties
                         Town of Apple Valley