BILL ANALYSIS                                                                                                                                                                                                    Ķ



                                                                  AB 325
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          Date of Hearing:   May 1, 2013

               ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
                                 Norma Torres, Chair
                  AB 325 (Alejo) - As Introduced:  February 13, 2013
           
          SUBJECT  : Land use and planning: cause of actions: time  
          limitations.

           SUMMARY  : Allows up to three years after certain city or county  
          actions, including the adoption of a housing element, for a  
          party to initiate a challenge to the action if it is being  
          brought "in support of or to encourage or facilitate the  
          development of housing that would increase the community's  
          supply of [affordable] 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 (2008)  
            164 Cal.App.4th 1561, with respect to the interpretation of  
            Section 65009 of the Government Code.

          2)Provides that an entity initiating a challenge in support of  
            affordable housing to 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.

          3)Provides that after 60 days or the date on which the city or  
            county takes final action in response to the deficiency  
            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.

          4)Removes from the current list of city or county actions that a  
            party may challenge pursuant to the notice and accrual  
            provision described above 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.

          5)Clarifies that in any action brought pursuant to the notice  








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            and accrual provisions described above, no legal remedy or  
            injunction pursuant to 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.

          6)Provides that a housing element from a prior planning period  
            may not be challenged if the city or county has adopted  
            housing element for the new planning period.

          7)Provides that if a third party challenges the adequacy of a  
            housing element in court 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.

           
          EXISTING LAW  


          1)Under the Planning and Zoning Law, specifies that "except as  
            provided under subdivision (d)," no action or proceeding shall  
            be maintained in any of the following cases by any person  
            unless the action or proceeding is commenced and service is  
            made on the legislative body within 90 days after the  
            legislative body's decision:

             a)   To attack, review, set aside, void, or annul the  
               decision of a legislative body to adopt or amend a general  
               or specific plan; 

             b)   To attack, review, set aside, void, or annul the  
               decision of a legislative body to adopt or amend a zoning  
               ordinance;


             c)   To determine the reasonableness, legality, or validity  
               of any decision to adopt or amend any regulation attached  
               to a specific plan;


             d)   To attack, review, set aside, void, or annul the  
               decision of a legislative body to adopt, amend, or modify a  








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               development agreement;


             e)   To attack, review, set aside, void, or annul any  
               decision related to applications for conditional use  
               permits and variances, or to determine the reasonableness,  
               legality, or validity of any condition attached to a  
               variance, conditional use permit, or any other permit;


             f)   Concerning any of the proceedings, acts, or  
               determinations taken, done, or made prior to any of the  
               decisions listed above.


             [Government Code Section 65009(c)]


          2)Specifies that in the case of an action or proceeding  
            challenging the adoption or revision of a housing element, the  
            action or proceeding may, in addition, be maintained if it is  
            commenced and service is made on the legislative body within  
            60 days following the date that the Department of Housing and  
            Community Development (HCD) reports its findings on a  
            jurisdiction's adopted housing element or adopted amendments  
            to a housing element [Government Code Section 65009(c)].

          3)Under Government Code Section 65009(d), provides that an  
            action or proceeding shall be commenced and the legislative  
            body served within one year after the accrual of the cause of  
            action, if the action or proceeding meets both of the  
            following requirements:


             a)   It is brought in support of or to encourage or  
               facilitate the development of housing that would increase  
               the community's supply of housing affordable to persons and  
               families with low or moderate incomes; and

             b)   It is brought with respect to actions taken pursuant to  
               Housing Element Law, the Housing Accountability Act, the  
               Subdivision Map Act, Density Bonus Law, or a housing  
               development approval.










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             [Government Code Section 65009(d)]


          4)Specifies that a cause of action brought pursuant to  
            Government Code Section 65509(d) shall not be maintained until  
            60 days have expired following notice to the city or county  
            specifying the deficiencies, and specifies that a cause of  
            action brought pursuant to subdivision (d) shall accrue 60  
            days after notice is filed or the legislative body takes a  
            final action in response to the notice, whichever occurs first  
            [Government Code Section 65009(d)].

          5)Provides that in any action filed on or after January 1, 1991,  
            to challenge the validity of a housing element, there shall be  
            a rebuttable presumption of the validity of the element or  
            amendment if the HCD has found that the element substantially  
            complies with the requirements of the law (Government Code  
            Section 65589.3).

          6)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, including;

             a)   Suspension of the city or county's authority to issue  
               building permits;

             b)   Suspension of the city or county's authority to grant  
               zoning changes and/or variances;

             c)   Suspension of the city or county's authority to grant  
               subdivision map approvals;

             d)   Mandating the approval of building permits for  
               residential housing that meet specified criteria;

             e)   Mandating the approval of final subdivision maps for  
               housing projects that meet specified criteria; and

             f)   Mandating the approval of tentative subdivision maps for  
               residential housing projects that meet specified criteria.









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             (Government Code Section 65009)


           FISCAL EFFECT  :   None

           COMMENTS  :   

           Background:  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. These five-  
          and eight-year periods are known as the housing element planning  
          period.  
           
          Before each revision, each community is assigned its fair share  
          of housing for each income category through the regional housing  
          needs assessment (RHNA) process. In its housing element, a  
          jurisdiction must identify and analyze existing and projected  
          housing needs, identify adequate sites with appropriate zoning  
          to accommodate its share of the RHNA, and ensure that regulatory  
          systems provide opportunities for, and do not unduly constrain,  
          housing 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:

           The Housing Accountability Act, which requires a city or  
            county to make one or more specified findings in order to  
            disapprove an affordable housing project.

           A provision requiring cities and counties, when adopting an  
            ordinance that 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. 









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           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 apply only those  
            ordinances, policies, and standards in effect as of the date  
            the developer's application is deemed complete.

          Current law provides 90 days to challenge a variety of local  
          government actions, including the adoption or amendment of a  
          general plan or specific plan, the adoption or amendment of a  
          zoning ordinance, the adoption or amendment of any regulation  
          attached to a specific plan, the adoption or amendment of a  
          development agreement, and decisions related to applications for  
          conditional use permits and zoning variances. This 90-day limit  
          is set forth in Government Code Section 65009(c), which also  
          specifies that the 90 days applies "except as provided in  
          subdivision (d)."

          Subdivision (d) relates to certain actions that are brought "in  
          support of or to encourage or facilitate the development of  
          housing that would increase the community's supply of  
          [affordable] housing." Those actions include the adoption or  
          amendment of a housing element. Under (d), the challenging party  
          is 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 has one year to file the action in court. This  
          process and statute of limitations is known as the "notice and  
          accrual provision" and also applies challenges in support of  
          affordable housing to actions related to the housing-related  
          statutes listed above. Subdivsion (d) is silent on when the  
          deficiency notice must be filed, and the prevailing  
          interpretation prior to a 2008 court decision was that the lack  
          of a specified timeframe meant that a party could challenge the  
          adequacy of a city's or county's housing element at any time  








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          during the housing element planning period. At the time, the  
          housing element planning period was five years for all  
          jurisdictions. 

          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 Program v. City of 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 stated:

            Although the statute does not specify the time within  
            which [a deficiency] notice must be given, it is our  
            conclusion that the statute must be interpreted as  
            containing a time limit within which this requirement  
            must be met? In sum, a party bringing a challenge  
            governed by section 65009, subdivision (d), has 90 days  
            from the date a legislative action is taken or approval  
            is given to notify the local land use authority of any  
            claimed deficiencies in such an action or approval. Its  
            claim then accrues 60 days after it gives this notice.

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

          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 both the 90-day statute of limitations for most land use  
          decisions and the specific exception related to challenges to  
          housing elements and other specific actions if the challenge was  
          brought in support of affordable housing. In the 25 years  
          between the passage of AB 998 and the Urban Habitat ruling,  
          housing advocates filed and successfully settled at least eleven  
          cases in which the 60-day deficiency notice was sent more than  
          90 days after adoption of the city's or county's housing  








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          element. In none of these cases was the timeliness of the 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. 

           Purpose of the Bill:  According to the author, AB 325 has been  
          introduced to modify the court's opinion in Urban Habitat. AB  
          325 allows an entity challenging specified city or county  
          actions, including the adoption of a housing element, where the  
          challenge is brought in support of affordable housing, to serve  
          the deficiency notice up to three years after the city's or  
          county's action. The bill does not change the existing notice  
          and accrual provisions. Cities and counties would still have 60  
          days to take a final action in response to the notice, and the  
          challenging party would still have one year after the city's or  
          county's final action in response to the notice to file an  
          action in court.  
             
          Current law (Government Code Section 65009) 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 permits.

                 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.








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          AB 325 clarifies that in any action or proceeding 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.

          Under current law, HCD operates a number of grant programs to  
          which cities and counties may apply. In many cases, the law  
          requires a city or county to have an HCD-approved housing  
          element in order to be eligible for funding.  AB 325 provides  
          that if a third-party challenges the adequacy of a housing  
          element in court 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.

           Arguments in Support:  According to the sponsors of AB 325, the  
          California Rural Legal Assistance Foundation, Housing  
          California, and the Western Center on Law and Poverty,  
          "Deficiencies in a housing element may only come to light when  
          the plan is implemented, e.g. when an affordable development is  
          proposed or a domestic violence or homeless shelter looks to  
          open its doors. The old law, part of legislation sponsored by  
          the League of California Cities in 1983, recognized that any  
          harm or deficiency might not be known until a development was  
          undertaken. That law allowed citizens to send a deficiency  
          notice to the local government at any point during the planning  
          period, and then bring suit if the locality did not fix its  
          housing element. Far from opening a floodgate for litigation,  
          only 11 suits were brought in 25 years. The simple existence of  
          a real accountability mechanism spurred local governments to  
          address the housing needs of all residents and obey the law." 
           
           Arguments in Opposition:  Opponents, including the California  
          Chapter of the American Planning Association, the League of  
          California Cities, the Rural County Representatives of  
          California, and the California State Association of Counties,  
          argue that AB 325 "does not differentiate between major  
          noncompliance with state law or a small difference in  
          interpretation and targets jurisdictions that have made a major  








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          effort to comply with the housing element law." Opponents argue  
          that the three-year statute of limitations creates too much  
          uncertainty for local agencies and could lead to an increase in  
          costly litigation at a time when state and local resources are  
          limited. They additionally argue that the appropriate time for  
          interested citizens to become involved with a community's  
          housing element is when it is adopted, not three years later,  
          and that there is ample opportunity for interested parties to  
          engage prior to adoption given that Housing Element Law  
          specially requires outreach and public participation.  
           
           Staff Comments:  Currently, 80% of all cities and counties have  
          adopted a housing element that HCD has found to be in  
          substantial compliance with the law. Another 10% have housing  
          elements that are currently under review by HCD. The remaining  
          10% have either never submitted a housing element to HCD for  
          review for the current planning period, have submitted a draft  
          to HCD but have not adopted the element, or have adopted a  
          housing element that HCD has found does not substantially comply  
          with the requirements of the law. Current law establishes a  
          rebuttable presumption of validity for a housing element that  
          HCD has found to be in substantial compliance with the law.  
          While it is true that a city or county can be sued over its  
          adopted housing element whether or not HCD has found it to be  
          compliance, the rebuttable presumption provides a high bar in  
          terms of challenging an HCD-approved element. As far as staff is  
          aware, only one suit has ever been brought against a housing  
          element that HCD had found to be in substantial compliance with  
          the law. Thus, realistically it is only the small minority of  
          jurisdictions that HCD has found are not in compliance that is  
          at risk of a lawsuit. 

          There are compelling reasons to provide a longer enforcement  
          period for housing elements. The state generally does not  
          enforce housing element law or other affordable housing laws  
          directly. Enforcement relies on local governments' voluntary  
          compliance with the possibility of citizen enforcement action,  
          most often by affordable housing advocacy groups. There are not  
          many of these nonprofit organizations in the state and their  
          resources are always spread 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  








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          California Association of Governments, for instance, includes  
          200 jurisdictions, all of which must adopt their next housing  
          element by October 15, 2013. As long as housing element law 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 prior to the Pleasanton case it was widely  
          agreed that a challenge could be filed at any point during the  
          housing element planning period, this bill offers a compromise  
          by allowing potential challengers to serve a deficiency notice  
          only within three years of adoption of the housing element. 

          In addition, in 2006, the Legislature enacted AB 32 (Nuņez),  
          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 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.  Achieving the land use vision laid out in the  
          SCS relies on cities and counties altering 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 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 








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          SB 375 at the local level is lost.

           Previous Legislation:  This bill is identical to AB 1220 (Alejo,  
          2011), which was vetoed by Governor Brown with the following  
          veto message:  
           
              "While I understand the value of using the courts to  
              compel compliance with state housing goals, there  
              should be a balance between a local government's  
              planning authority and citizen oversight. This bill  
              tilts that balance and creates too much uncertainty."

          The bill is also substantially similar to AB 602 (Feuer, 2010).  
          That bill was vetoed by Governor Schwarzenegger.

           Double-Referred:   This bill was also referred to the Local  
          Government Committee, where it will be heard should it pass out  
          of this committee.
           
          REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          California Rural Legal Assistance Foundation (co-sponsor)
          Housing California (co-sponsor)
          Western Center on Law and Poverty (co-sponsor)
          California Association of Realtors
          California Coalition for Rural Housing
          Non-Profit Housing Association of Northern California
          Public Advocates

           Opposition 
           
          American Planning Association, California Chapter
          California State Association of Counties
          Cities of Alameda, Alhambra, Burbank, Encinitas, Fremont,  
               Fresno, Lakewood, Lathrop, Ontario, Rancho Cucamonga,  
               Reedley, Santa Monica, Thousand Oaks, Torrance, Tulare, and  
               Wasco
          Civil Justice Association of California
          Counties of Orange and Sacramento
          League of California Cities
          Rural County Representatives of California
           
          Analysis Prepared by  :    Anya Lawler / H. & C.D. / (916)  








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          319-2085