BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 325
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          ASSEMBLY THIRD READING
          AB 325 (Alejo) 
          As Amended  May 29, 2013
          Majority vote 

           HOUSING             5-2         LOCAL GOVERNMENT    5-3         
           
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          |Ayes:|Torres, Atkins, Brown,    |Ayes:|Alejo, Bradford, Gordon,  |
          |     |Chau, Mullin              |     |Mullin, Rendon            |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Beth Gaines, Maienschein  |Nays:|Achadjian, Levine,        |
          |     |                          |     |Melendez                  |
           ----------------------------------------------------------------- 
           SUMMARY  :  Revises the time limits for a party to initiate a  
          challenge to certain city or county actions, including the  
          adoption of a housing element, if the challenge 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 certain city or county actions may serve  
            a deficiency notice as follows:

             a)   For a challenge to the adoption or revision of a housing  
               element that the Department of Housing and Community  
               Development (HCD) has found to substantially comply with  
               the requirements of Housing Element Law, the deficiency  
               notice may be served up to 270 days after the city's or  
               county's action to revise or adopt.

             b)   For a challenge to the adoption or revision of a housing  
               element that HCD has not found to substantially comply with  
               the requirements of Housing Element Law, a city or county  
               action related to the Least Cost Zoning Law, annual limits  
               on housing permits, or the adoption or revision of a local  
               density bonus ordinance, the deficiency notice may be  
               served up to three years after the city's or county's  








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               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 the  
            following time limits for filing an action in court:

             a)   For a challenge to a housing element that HCD has found  
               to substantially comply with the requirements of the law,  
               six months.

             b)   For all other challenges, one year.

          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  
            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  








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          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 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  








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          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 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 the adoption or revision of a housing  








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          element that HCD has found substantially complies with the  
          requirements of Housing Element Law to file a deficiency notice  
          any time within 270 days (nine months) after the adoption or  
          revision.  The city or county would still have 60 days to take a  
          final in action in response to the deficiency notice, and the  
          challenging party would have six months after the city or county  
          responds to file suit in court. 

          For challenges in support of affordable housing to the adoption  
          or revision of a housing element that HCD has not found  
          substantially complies with the requirements of the law, a city  
          or county action related to the Least Cost Zoning Law, annual  
          limits on housing permits, or the adoption or revision of a  
          local density bonus ordinance, the bill allows the challenging  
          party to serve a deficiency notice up to three years after the  
          city's or county's action.  Cities and counties would still have  
          60 days to respond to the notice, and the challenging party  
          would 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:

          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.








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          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.


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


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