BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1220| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 1220 Author: Alejo (D), et al. Amended: 9/2/11 in Senate Vote: 21 SENATE TRANSPORTATION & HOUSING COMMITTEE : 5-3, 6/14/11 AYES: DeSaulnier, Kehoe, Lowenthal, Pavley, Simitian NOES: Gaines, Harman, Huff NO VOTE RECORDED: Rubio ASSEMBLY FLOOR : 47-26, 5/12/11 - See last page for vote SUBJECT : Statute of limitations and remedies for specified housing-related challenges SOURCE : California Rural Legal Assistance Foundation Housing California DIGEST : This bill allows an entity in support of affordable housing to challenge a housing element or a specified city or county housing ordinance within three years of adoption. Senate Floor Amendments of 9/2/11 alter the statute of limitations to provide that the entity bringing the challenge under the specified statutes must serve the notice of deficiency within three years of the city's or county's action rather than five years. ANALYSIS : The Planning and Zoning Law requires cities CONTINUED AB 1220 Page 2 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 include a number of sections governing zoning and entitlements specifically related to housing, including: 1. 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. 2. 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. 3. 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 CONTINUED AB 1220 Page 3 development. 4. 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. 5. 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 ŬGOV] 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 Ŭaffordable] 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 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 CONTINUED AB 1220 Page 4 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: 1. Suspend the authority of the city or county to issue building permits. 2. Suspend the authority of the city or county to grant zoning changes and/or variances. 3. Suspend the authority of the city or county to grant subdivision map approvals. 4. Mandate the approval of building permits for residential housing that meet specified criteria. 5. Mandate the approval of final subdivision maps for housing projects that meet specified criteria. 6. 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 GOV Section 65009 notice and accrual provision, limits the applicability of CONTINUED AB 1220 Page 5 the notice and accrual provision, and provides a three-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 Ŭaffordable] housing." Specifically, this bill: 1. 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 GOV. 2. Removes from the current list of city or county actions that a party may challenge pursuant to the GOV Section 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. This 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. 3. 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 three 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 three 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 three years of the city's or county's action, whichever occurs first. 4. Clarifies that in any action brought pursuant to the notice and accrual provisions of GOV 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 CONTINUED AB 1220 Page 6 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. 5. 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 for purposes of state housing grant programs. Comments 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. 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 GOV Section 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 CONTINUED AB 1220 Page 7 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 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. 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 Ŭone-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 CONTINUED AB 1220 Page 8 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. 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' (SANDAG's) Regional Comprehensive Plan describes this typical California paradox in the following way: Under current plans and policies, more than 90 percent of Ŭthe 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 CONTINUED AB 1220 Page 9 which they control: zoning and land use entitlements. Prior Legislation Last year, the Legislature approved a bill, AB 602 (Feuer), Session of 2009-10, 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." FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 9/6/11) California Rural Legal Assistance Foundation (co-source) Housing California (co-source) 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 Mammoth Lakes Housing Inc. Mercy Housing Natural Resources Defense Council Planning and Conservation League Public Advocates San Diego Housing Federation Self-Help Enterprises Silicon Valley Leadership Group Sonoma County Task Force for the Homeless CONTINUED AB 1220 Page 10 Southern California Association of Non-Profit Housing Transform United Cerebral Palsy Urban Habitat Western Center on Law and Poverty OPPOSITION : (Verified 9/6/11) Affordable Housing Advocates American Council of Engineering Companies of California American Planning Association, California Chapter Association of California Cities - Orange County California State Association of Counties Cities of Brea, Carlsbad, Cerritos, Cypress, Eastvale, Fullerton, Mission Viejo, Red Bluff, and Whittier Civil Justice Association of California Counties of Marin, Orange, San Diego, Santa Clara, and Tulare Fresno Mayor Ashley Swearengin League of California Cities Los Angeles Division of the League of California Cities Regional Council of Rural Counties Town of Apple Valley ARGUMENTS IN SUPPORT : According to the author's office, 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. ARGUMENTS IN OPPOSITION : Local government opponents believe a three-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. CONTINUED AB 1220 Page 11 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. ASSEMBLY FLOOR : 47-26, 5/12/11 AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block, Blumenfield, Bonilla, Bradford, Brownley, Buchanan, Butler, Charles Calderon, Campos, Carter, Davis, Dickinson, Eng, Feuer, Fong, Fuentes, Furutani, Galgiani, Gordon, Hall, Hayashi, Roger Hernández, Hill, Huber, Hueso, Huffman, Lara, Bonnie Lowenthal, Ma, Mendoza, Mitchell, Monning, Pan, Perea, V. Manuel Pérez, Skinner, Solorio, Swanson, Wieckowski, Williams, Yamada, John A. Pérez NOES: Achadjian, Bill Berryhill, Conway, Cook, Donnelly, Fletcher, Beth Gaines, Gatto, Grove, Hagman, Halderman, Harkey, Jeffries, Jones, Knight, Logue, Mansoor, Miller, Morrell, Nestande, Nielsen, Norby, Olsen, Silva, Smyth, Wagner NO VOTE RECORDED: Cedillo, Chesbro, Garrick, Gorell, Portantino, Torres, Valadao JJA:kc 9/6/11 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED