BILL ANALYSIS                                                                                                                                                                                                    Ó


          |SENATE RULES COMMITTEE            |                        AB 325|
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                                    THIRD READING

          Bill No:  AB 325
          Author:   Alejo (D), et al.
          Amended:  5/29/13 in Assembly
          Vote:     21

          AYES:  DeSaulnier, Beall, Hueso, Lara, Liu, Pavley, Roth
          NOES:  Gaines, Galgiani, Wyland
          NO VOTE RECORDED:  Cannella

           ASSEMBLY FLOOR  :  41-30, 5/31/13 - See last page for vote

           SUBJECT  :    Statute of limitations and remedies for specified  
          housing-related challenges

           SOURCE  :     California Rural Legal Assistance Foundation
                      Housing California
                      Western Center on Law and Poverty

           DIGEST  :    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.

           ANALYSIS  :    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  


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          cities and counties in rural non-MPO regions must revise their  
          housing elements every five years.  These five- and eight-year  
          periods are known as the housing element planning period.

          Before each revision, each community receives its fair share of  
          housing for each income category through the regional housing  
          needs assessment (RHNA) process.  A housing element must  
          identify and analyze existing and projected housing needs,  
          identify adequate sites with appropriate zoning to meet its  
          share of the RHNA, and ensure that regulatory systems provide  
          opportunities for, and do not unduly constrain, housing  
          development.  The Department of Housing and Community  
          Development (HCD) reviews both draft and adopted housing  
          elements to determine whether or not they are in substantial  
          compliance with the law.  Many of HCD's grant programs require a  
          city or county to have an HCD-approved housing element in order  
          to be eligible for funding.

          The Planning and Zoning Law and the Subdivision Map Act also  
          include a number of sections governing zoning and entitlements  
          specifically related to housing, including:

          1.The Housing Accountability Act, which requires a city or  
            county to make one or more specified findings in order to  
            disapprove a particular housing development.

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

          3.Density bonus law, which requires cities and counties to grant  
            a developer a density bonus, incentives, and concessions, when  
            the developer proposes to include specified percentages of  
            affordable housing within a development. 

          4.The Least Cost Zoning Law, which requires cities and counties  
            to designate and zone sufficient vacant land for residential  
            use with appropriate standards to meet housing needs for all  
            income categories and to contribute to producing housing at  
            the lowest possible cost.

          5.A requirement that, when determining whether to approve a  



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            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  
          existing 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  
          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.



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          Existing law also requires a court, if it finds any portion of a  
          general plan, including a housing element, out of compliance  
          with the law, to include within its order or judgment one or  
          more of the following remedies for any or all types of  
          developments or any or all geographic segments of the city or  
          county until the city or county has complied with the law:

          1.Suspend the authority of the city or county to issue building  

          2.Suspend the authority of the city or county to grant zoning  
            changes and/or variances.

          3.Suspend the authority of the city or county to grant  
            subdivision map approvals.

          4.Mandate the approval of building permits for residential  
            housing that meet specified criteria.

          5.Mandate the approval of final subdivision maps for housing  
            projects that meet specified criteria.

          6.Mandate the approval of tentative subdivision maps for  
            residential housing projects that meet specified criteria.

          This bill states the intent of the Legislature to modify the  
          portion of the Urban Habitat opinion relating to the statute of  
          limitations for using the 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  
          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:

          1.States the intent of the Legislature to modify the court's  
            opinion in Urban Habitat Program v. City of Pleasanton with  
            respect to the interpretation of Section 65009 of the  
            Government Code.

          2.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  



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            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.

          3.Except as described in 4) below, 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.

          4.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.
          5.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.

          6.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.

           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  



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          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. 

           Unlocking the private market  .  The purpose of housing element  
          law is to create opportunities for the private housing market to  
          function.  Builders cannot build without access to appropriately  
          zoned land, and current land use plans in many cities and  
          counties in California fail to provide sufficient opportunities  
          to accommodate projected population growth.  The San Diego  
          Association of Governments' Regional Comprehensive Plan  
          describes this typical California paradox in the following way:

               Under current plans and policies, more than 90% 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 7% 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  



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               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 traffic.

          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.

           Previous legislation  .  Twice in the last three years, the  
          Legislature has approved a bill very similar to this one.

          AB 602 (Feuer, 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, 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  



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               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.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  No   Local:  

           SUPPORT  :   (Verified  6/26/13)

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

           OPPOSITION  :    (Verified  6/26/13)

          American Planning Association - California Chapter
          California State Association of Counties
          Cities of Alameda, Alhambra, Brawley, Burbank, Camarillo,  
            Claremont, Clayton, Concord, Cypress, Danville, Del Mar,  
            Diamond Bar, El Centro, Encinitas, Fairfield, Folsom, Fountain  
            Valley, Fremont, Fresno, Grass Valley, Inglewood, La Cańada  
            Flintridge, La Mirada, Lafayette, Lakewood, Lathrop, Moorpark,  
            Norwalk, Ontario, Orinda, Pleasant Hill, Pleasanton, Pomona,  
            Poway, Rancho Cucamonga, Reedley, Roseville, Sacramento, San  
            Diego, San Gabriel, San Luis Obispo, Santa Barbara, Santa  
            Monica, Santa Rosa, Scotts Valley, South San Francisco,  
            Sunnyvale, Thousand Oaks, Torrance, Tracy, Tulare, Visalia,  
            Vista, Wasco, West Hollywood, and Whittier
          Civil Justice Association of California
          Counties of Lassen, Marin, Orange, Sacramento, San Diego, and  



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          League of California Cities
          Marin County Council of Mayors and Councilmembers
          Rural County Representatives of California
          Town of Atherton
          Town of Hillsborough

           ARGUMENTS IN SUPPORT  :    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."

           ARGUMENTS IN OPPOSITION :    The Civil Justice Association  
          opposes lengthening statutes of limitations generally.  They  
          believe memories fade, witnesses become difficult to locate, and  
          courts are less likely to be fair.  Moreover, short statutes of  
          limitations encourage the diligent settling of claims.

           ASSEMBLY FLOOR  :  41-30, 5/31/13
          AYES:  Alejo, Ammiano, Atkins, Blumenfield, Bocanegra, Bonilla,  
            Bradford, Brown, Ian Calderon, Campos, Chau, Cooley, Daly,  
            Dickinson, Fong, Fox, Garcia, Gomez, Gonzalez, Gray, Hall,  
            Roger Hernández, Jones-Sawyer, Lowenthal, Medina, Mitchell,  
            Mullin, Nazarian, Pan, V. Manuel Pérez, Quirk-Silva, Rendon,  
            Salas, Skinner, Stone, Ting, Weber, Wieckowski, Williams,  
            Yamada, John A. Pérez
          NOES:  Achadjian, Allen, Bigelow, Bloom, Chávez, Conway, Dahle,  
            Donnelly, Beth Gaines, Gatto, Gordon, Gorell, Grove, Hagman,  
            Harkey, Jones, Levine, Linder, Logue, Maienschein, Mansoor,  
            Melendez, Morrell, Muratsuchi, 
          Nestande, Olsen, Patterson, Wagner, Waldron, Wilk
          NO VOTE RECORDED:  Bonta, Buchanan, Chesbro, Eggman, Frazier,  
            Holden, Perea, Quirk, Vacancy

          JA:ej  6/26/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

                                   ****  END  ****



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