BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 325
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          ASSEMBLY THIRD READING
          AB 325 (Alejo)
          As Introduced  February 13, 2013
          Majority vote 

           HOUSING             5-2         LOCAL GOVERNMENT    5-3         
           
           ----------------------------------------------------------------- 
          |Ayes:|Torres, Atkins, Brown,    |Ayes:|Alejo, Bradford, Gordon,  |
          |     |Chau, Mullin              |     |Mullin, Rendon            |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Beth Gaines, Maienschein  |Nays:|Achadjian, Levine,        |
          |     |                          |     |Melendez                  |
           ----------------------------------------------------------------- 
           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  
            Government Code Section 65009.

          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  








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            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  
            and accrual provisions described above, no legal remedy or  
            injunction 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.
           
          FISCAL EFFECT :  None

           COMMENTS  :  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  








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          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 to challenges in support  
          of affordable housing to actions related to the Housing  
          Accountability Act, local limits on housing production, Density  
          Bonus Law, the Least Cost Zoning Law, and the statutory  
          requirement that a city or county, when determining whether to  
          approve a tentative subdivision map, apply only those  
          ordinances, policies, and standards in effect as of the date the  
          developer's application is deemed complete.

          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 during the housing element planning  
          period.  At the time, the housing element planning period was  
          five years for all jurisdictions.  Now it is eight years for  
          cities and counties located within the territory of a  
          metropolitan planning organization (MPO), and five years for  
          cities and counties in rural non-MPO regions.

          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 Regional Housing Needs Assessment (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  








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            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 11  
          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 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. 

          This bill modifies the court's opinion in Urban Habitat and  
          makes several other changes to Government Code Section 65009.   
          The bill allows an entity initiating a challenge in support of  
          affordable housing to a city or county action relating to  
          Housing Element Law (such as the adoption or amendment of a  
          housing element), the Least Cost Zoning Law, annual limits on  
          housing permits, or the adoption of a density bonus ordinance to  
          serve a 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  








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          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 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, Department of Housing and Community  
          Development (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.  This bill 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.








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          According to supporters, "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."  
           
          Opponents argue that this bill "does not differentiate between  
          major noncompliance with state law or a small difference in  
          interpretation and targets jurisdictions that have made a major  
          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.  
           

           Analysis Prepared by  :    Anya Lawler / H. & C.D. / (916)  
          319-2085 


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