By David M. Greenwald
Executive Editor
Many communities and anti-growth activists seem to be counting on inaction from HCD and the state with regards to enforcement of housing laws. In many ways, what happens next may determine whether California addresses its housing crisis or whether the situation will get worse.
On February 2, HCD sent a letter to the city of Oakland who had submitted their revised draft housing element for review on December 7. While HCD noted, “The revised draft element addresses many statutory requirements described in HCD’s September 28, 2022 review” it states, “revisions will be necessary to comply with State Housing Element Law.”
Among other things, the city is nailed on “an inventory of land suitable and available for residential development, including vacant sites and sites having realistic and demonstrated potential for redevelopment during the planning period…”
HCD notes that the “Element was revised to describe the existing uses of some nonvacant opportunity sites, but it should demonstrate the potential for redevelopment on identified sites…”
Not only are there cities that continue to fail to gain approval by HCD for their 
housing element, there is a sizable number of cities and counties, in the Bay Area for instance, that did not meet the deadline to submit a Housing Element.
The question arises will the state enforce the law? Or perhaps the courts will.
On Tuesday, the San Francisco Chronicle reported, “Housing advocates are about to deliver a message to the Bay Area: Comply with state housing law or face the consequences.”
Twelve lawsuits have been filed by three pro-housing non-profits – YIMBY Law, the California Housing Defense Fund and Californians for Homeownership.
These groups are suing: Belvedere, Burlingame, Cupertino, Daly City, Fairfax, Martinez, Novato, Palo Alto, Pinole, Pleasant Hill, Richmond and Santa Clara County for failing to submit their housing element.
According to the Chronicle: “Most of the local governments targeted by these lawsuits didn’t adopt plans at all, the groups’ legal counsel told me, while others gave the illusion of compliance by greenlighting their own blueprints, even though these plans hadn’t been reviewed by the state Department of Housing and Community Development.”
The goal of the lawsuits: “Force local jurisdictions to comply with state law by developing and adopting a plan for building the required number of homes and reminding them that they’re subject to what’s known as the builder’s remedy while they’re out of compliance.”
Here is where things get interesting. There is one clear remedy here: “the builder’s remedy.” At this point, this is an untested provision of the law. It allows “developers to bypass local zoning standards in noncompliant cities to build residential projects with a certain percentage of low-income or moderate-income units.”
The Chronicle asks the key question: “why are the lawsuits necessary, given that the builder’s remedy technically goes into effect the moment a city’s housing element falls out of compliance?”
“The thing we hear from a lot of cities is, ‘We’re working on (the housing element). We’re trying,’ ” said Matthew Gelfand, attorney for Californians for Homeownership. “But while you’re working on it (past the deadline) you have to understand that you’re subject to certain penalties. … And that’s when we end up suing because they don’t want to acknowledge the penalties that come from the fact that they didn’t do their jobs earlier.”
He added, “It’s particularly frustrating in the Bay Area, because … they saw what happened in Southern California.”
What happened in Southern California was that many cities failed to adopt their housing elements by October 15, 2021. That resulted in lawsuits from some of these groups and “resulted in settlements that required the cities to adopt compliant housing plans by a certain date, with state reviews along the way, and forced them to acknowledge they were subject to the builder’s remedy.”
“From my perspective, this is just the first step in a kind of generational campaign to completely change the way land-use regulation gets done,” Keith Diggs, an attorney for YIMBY Law told the Chronicle.
The Chronicle notes, “While it is indeed frustrating that Bay Area governments didn’t learn from their counterparts in Southern California, what is especially frustrating is that lawsuits are necessary at all.
“We are talking, after all, about enforcing that simplest of concepts: the deadline. It’s baked into us in elementary school; if you don’t turn in your homework on time, there will be consequences.”
I think the biggest issue here however is that a lot of people assume that the state is not going to be able to force local communities to build sufficient housing.
HCD has clearly adopted a more aggressive approach. We have seen many communities at least hit with non-compliance.
The question is – what happens if they failed to comply? Will there be real consequences? Or are we in the realm of – “stop or I’ll say stop again.”
The potential loss of fundings is one stick. A bigger stick would be losing control over land use authority – but that seems destined to be a very lengthy court battle that could take years to sort out.
Will these lawsuits have an impact? In Southern California, most seemed to settle the lawsuits. It is unclear what the courts are willing to do about cities and counties that utterly refuse to comply with the law.
But in a real sense, the future of housing depends on what the courts and the state is willing to do to crack down on local communities.
In the meantime, it appears that the city of Davis is not going to be one of these. So the city might live to fight another day – on the next round of housing elements.
Not me – I’m actually counting on “action”.
As they say, for every action there is a reaction.
But regardless of the battles, the housing isn’t actually going to be built. Even the “builder’s remedy” requires inclusion of affordable units (and as noted in the article above, such “remedies” are likely going to be tied-up in court). I read in another article that some cities are “self-certifying” their housing elements (as one likely point of contention).
There also aren’t enough subsidies available to build all of the Affordable housing that the state is requiring.
As noted in other articles I’ve posted, the RHNA requirements are a “farce” (fake). It’s going to collapse under its own weight.
“But regardless of the battles, the housing isn’t actually going to be built”
You and I may agree on that point while disagreeing on the consequences of it.
Probably true, though there’s been no shortage of continuing sprawl (despite a declining state population over the past 3 years).
In regard to the areas which are already developed (e.g., the Bay Area), folks have been leaving there in droves – and prices have been declining. (Both of which are occurring for more than one reason.)
It does seem as though California’s days of enormous economic and population growth are in the rear-view mirror. (And apparently, that’s what some interests are actually objecting to.) Again, if you look at the funding sources for some of the groups suing cities, it’s pretty obvious what their interest is.
And if you look at the campaign funding sources for individual state representatives who are pushing this, you’d probably find those same interests supporting them.
But it does seem as though they’ve bitten-off more than they can chew, this time. (Almost rather comical.)
I said this a year or two ago about RHNA and HCD. That just planning for housing isn’t enough. There has to be a likelihood that the housing will actually be developed. I used the extreme and outrageous example of a city’s disingenuous plans for zoning a superfund site for housing. But it’s more likely to be planned housing where there are not services. Or in many city’s cases; infill housing that has no likelihood of being developed due to political and economic factors. Building infill can be expensive. Everyone wants those mixed use homes to be built in their downtown. But that’s expensive to build. If a builder has that or easier peripheral development options or even easier infill that isn’t in a dense area; many if not most builders are going to take the easier and less costly development option in other cities….which leaves the city in question with undeveloped rezoned properties and ultimately less homes. So if a city like Davis has a track record for difficult development….even infill development….then it’s going to be held against them for making their RHNA homes quota…if not now then in the next cycle.
I think think falls under the unlikely to be developed for political or economic reasons that I mentioned earlier. Again just because a city plans it doesn’t mean a builder is going to build it. It has to make economic sense to them. It’s going to be costly to build higher density mixed and mixed use projects as infill projects. And because of that cost; financially stomaching a higher rate of affordable housing units in the project….even if you get a free pass on the politics of getting something rezoned….is prohibitive. Also, as a developer, do you really want to make enemies of the local city government and the neighbors?….even if you have the legal authority by the state to proceed with development?
IMO, all this forcing housing down communities’ throats is unnecessary. Just require all new commercial and industrial real estate to create affordable housing equal to the number of employees the new development is projected to employ. Alternatively, they could impose property taxes on new commercial and industrial construction that would fund new public affordable housing. And finally fund and create NEW COMMUNITIES (infrastructure) that integrates new commercial and industrial development with residential development. Imagine if the state simply said…okay, we’re going to turn Plainfield into a community that is three times the size of what DISC was supposed to be. New integrated communities could pop up all over California near or adjacent to existing cities New housing would be created. New commercial and industrial space would be available for companies. And cities would have the option of annexing these new communites into themselves or keeping them separate; whatever works out for them.
Unfortunately that’s not an option locally at the moment. That’s what redevelopment agencies used to do. I’ve suggested the solution is for the state to provide communities with the incremental property tax revenue created by new development, and just drop the condemnation provision along with the “plighted” requirement that was in redevelopment before.
There’s nothing stopping a city from imposing a property tax to fund affordable housing. The problem is that no one likes to tax themselves (education might be the only thing that gets a pass). So yeah, it would take a state wide initiative sort of like the old redevelopment agencies.
Here’s where I differ from the old redevelopment agency model. I believe those funds should fund a local PUBICLY owned development company. The goal would be to produce publicly owned housing. Some of it market rate; most of it affordable housing that wouldn’t have to be continuously subsidized.
The funds in the old system were lost in an inefficient, bureaucratic and yes corrupt system. Creating local development public development companies is a way to create a direct pipeline for the funds to get to the housing construction. There should be a number of units per X amount of dollars expectation and if they don’t meet it; the state takes over the local public development company from the city or county.
Parcel taxes have a pretty high success rate in California, even with the 2/3 vote requirement. https://ballotpedia.org/Parcel_tax_elections_in_California
But with about 26,000 parcels (off the top of my head from previous conversations), how high per parcel would it have to be to build any meaningful amount of housing?
Worth noting that there are individuals presently arguing in favor of this approach. I just question how much it’s likely to yield.
Well remember, I’m proposing creating an actual development company. A local publicly/municipally owned and run development company. The development and construction of housing would be if not for profit, sustainable fiscal venture. So that means the creation of market rate and affordable housing that would not need continuous subsidies. I think DJUSD gets about $14M from a $750 per parcel tax? So even if cut it in half and had a $325 parcel tax that netted a $7M in funds for a development company…that’s substantial to go along with the income generated from the actual homes that would be owned by the city (I imagine a mix of market rate homes sold off, held for rentals and the majority being affordable homes). Why? Because the company being an extension of the city would have access to cheaper bond money to build with. It also greatly reduces the risk involved in development that other conventional land/builder lenders have (so better financing opportunities). So to answer your question; I think you could scale it pretty quickly.