BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 325| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 325 Author: Alejo (D), et al. Amended: 5/29/13 in Assembly Vote: 21 SENATE TRANSPORTATION & HOUSING COMMITTEE : 7-3, 6/25/13 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 CONTINUED AB 325 Page 2 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 CONTINUED AB 325 Page 3 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. CONTINUED AB 325 Page 4 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 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 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 CONTINUED AB 325 Page 5 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. Background 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 CONTINUED AB 325 Page 6 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 CONTINUED AB 325 Page 7 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 CONTINUED AB 325 Page 8 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: No SUPPORT : (Verified 8/22/13) 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 Transform Urban Habitat OPPOSITION : (Verified 8/22/13) American Planning Association - California Chapter California State Association of Counties Cities of Adelanto, Alameda, Alhambra, Antioch, Azusa, Blue Lake, Brawley, Burbank, Camarillo, Ceres, Chowchilla, Claremont, Clayton, Cloverdale, Concord, Corona, Coronado, Cupertino, Cypress, Danville, Del Mar, Diamond Bar, Downey, El Centro, Encinitas, Fairfield, Folsom, Fountain Valley, Fremont, Fresno, Grass Valley, Hillsborough, Huntington Beach, Inglewood, La Cańada Flintridge, La Mirada, Lafayette, Lakewood, Lathrop, Moorpark, Murrieta, Norwalk, Ontario, Orinda, Palo Alto, Paramount, Pasadena, Pleasant Hill, Pleasanton, Pomona, Poway, Rancho Cucamonga, Reedley, Roseville, Sacramento, San Diego, San Gabriel, San Luis Obispo, San Marcos, San Mateo, San Rafael, Santa Barbara, Santa Monica, Santa Rosa, Scotts Valley, Solana Beach, South CONTINUED AB 325 Page 9 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 Tulare 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 8/22/13 Senate Floor Analyses CONTINUED AB 325 Page 10 SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED