BILL ANALYSIS                                                                                                                                                                                                    Ķ

          SENATOR MARK DESAULNIER, CHAIRMAN              AUTHOR:  alejo
                                                         VERSION: 5/29/13
          Analysis by:  Mark Stivers                     FISCAL:  no
          Hearing date:  June 25, 2013


          Statute of limitations and remedies for specified  
          housing-related challenges


          This bill allows an entity in support of affordable housing to  
          initiate a challenge to a housing element or a specified city or  
          county housing ordinance within three years of adoption, except  
          for an HCD-approved housing element.  


          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.


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          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 a particular housing development.
           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. 
           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 (referred to  
          below as "the lapsing of the notice period"), 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  


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          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 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 generally provides a three-year time  
          frame for parties to initiate an action "in support of or to  


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          encourage or facilitate the development of housing that would  
          increase the community's supply of [affordable] housing," unless  
          the action relates to a HCD-approved housing element.   
          Specifically, the bill:

           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.

           Except as described in the next bullet, 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 the lapsing of the notice period,  
            the challenging party has one year to file an action in court.  

           Provides that a party challenging an adopted housing element  
            that HCD has found to be in substantial compliance with the  
            law must serve a deficiency notice within 270 days of the  
            adoption of the housing element and file an action in court  
            within 6 months of the lapsing of the notice period.  

           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.


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           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.


           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.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. 

           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.   


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            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  
            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 notice only within three years of adoption  
            of the housing element or specified ordinance.  

           4.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  


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            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?As a result, home prices will continue to skyrocket,  
               forcing many to abandon their dreams of home ownership or  
               move to neighboring areas with less expensive housing  
               costs.  These people, who teach our children, police our  
               neighborhoods, and bag our groceries, often become  
               long-distance commuters, and with few transit options, our  
               freeways become more and more congested.  The result for  
               our region will be an ongoing housing crisis and worsening  

            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.
          5.Key to AB 32/SB 375 implementation  .  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  


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            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.
           6.Current level of housing element compliance  .  According to  
            HCD, 83 percent of cities and counties have adopted an  
            HCD-approved housing element for the current planning period.   
          7.Arguments in opposition  .  Local government opponents argue a  
            three-year notice period (which makes the ultimate statute of  
            limitations over four years when the response and filing  
            periods are added) does not increase compliance or build more  
            affordable housing but results only in expensive lawsuits that  
            change just a few portions of a housing element.  They argue  
            that the bill creates uncertainty for cities and counties as  
            well as developers for over four years while housing  
            advocates, project opponents, and others decide whether or not  
            to sue.  These four years represent almost the entire planning  
            period for rural cities and counties with a 5-year housing  
            element cycle and half the planning cycle for all other  
            jurisdictions, and litigation would continue beyond or almost  
            to the adoption of the next housing element, at which point  
            opponents believe it makes more sense for potential litigants  
            to weigh in on the adoption of the next housing element.   


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            Opponents also believe that the shorter statute of limitations  
            for cities and counties with HCD-approved housing elements  
            should apply additionally to the other types of  
            housing-related challenges described above and not just to  
            housing element challenges themselves.  

            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  .  Twice in the last three years, the  
            Legislature has approved a bill very similar to this one.  AB  
            602 (Feuer) of 2010 allowed entities to serve a deficiency  
            notice within five years of adoption of a housing element or  
            specified housing ordinance.  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.

            AB 1220 (Alejo) of 2011 reduced the period in which an entity  
            may serve a deficiency notice to three years.  Governor Brown  
            vetoed AB 1220, stating:

               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. 
            This bill differs from AB 1220 in that it provides that a  
            party challenging an HCD-approved housing element must serve a  
            deficiency notice within 270 days of the adoption of the  
            housing element and file an action in court within six months  
            of the lapsing of the notice period.  
          Assembly Votes:


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               Floor:         41-30
               L. Gov.:                          5-3
               H&CD:     5-2

          POSITIONS:  (Communicated to the committee before noon on  
          Wednesday,                                             June 19,  

               SUPPORT:  California Rural Legal Assistance Foundation  
                         Housing California (sponsor)
                         Western Center on Law and Poverty (sponsor)
                         California Association of Realtors
                         California Coalition for Rural Housing
                         Congress of California Seniors
                         Housing Advocacy Group
                         Mammoth Lakes Housing
                         Public Advocates
                         Non-Profit Housing Association of Northern  
                         Urban Habitat

               OPPOSED:  American Planning Association - California  
                         California State Association of Counties
                         City of Alameda
                         City of Alhambra
                         City of Brawley
                         City of Burbank
                         City of Camarillo
                         City of Claremont 
                         City of Clayton
                         City of Concord
                         City of Cypress
                         City of Danville
                         City of Del Mar
                         City of Diamond Bar
                         City of El Centro
                         City of Encinitas
                         City of Fairfield
                         City of Folsom
                         City of Fountain Valley
                         City of Fremont
                         City of Fresno
                         City of Grass Valley


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                         City of Inglewood
                         City of La Caņada Flintridge
                         City of Lafayette
                         City of Lakewood
                         City of La Mirada
                         City of Lathrop
                         City of Moorpark
                         City of Norwalk
                         City of Ontario
                         City of Orinda
                         City of Pleasant Hill
                         City of Pleasanton
                         City of Pomona
                         City of Poway
                         City of Rancho Cucamonga
                         City of Reedley
                         City of Roseville
                         City of Sacramento
                         City of San Diego
                         City of San Gabriel
                         City of San Luis Obispo
                         City of Santa Barbara
                         City of Santa Monica
                         City of Santa Rosa
                         City of Scotts Valley
                         City of South San Francisco
                         City of Sunnyvale
                         City of Thousand Oaks
                         City of Torrance
                         City of Tracy
                         City of Tulare
                         City of Visalia
                         City of Vista
                         City of Wasco 
                         City of West Hollywood
                         City of Whittier
                         Civil Justice Association of California
                         County of Lassen
                         County of Marin
                         County of Orange
                         County of Sacramento
                         County of San Diego
                         County of Tulare
                         Marin County Council of Mayors and Councilmembers
                         League of California Cities
                         Rural County Representatives of California


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                         Town of Atherton
                         Town of Hillsborough