Is the Housing Accountability Act the Solution to California's Housing Crisis?

• Publication year: 2019
• Author: by Sarah M. K. Hoffman

Is the Housing Accountability Act the Solution to California's Housing Crisis?

by Sarah M. K. Hoffman^*

Sarah M. K. Hoffman

I. INTRODUCTION

The maturing Housing Accountability Act ("HAA") is shaking up the housing development pipeline in California, but its polarizing effects have advocates reading the acronym as "Holding Agencies Accountable," while opponents think of it as "Hurting Agency Autonomy." So, what is the truth about the HAA?

California has been in a housing crisis since at least 1970, and the supply of new housing has simply not kept pace with demand.¹ This is in part due to the fact that permitting decisions are made in the first instance by local elected agencies, who are sensitive to political pressure from neighbors and community groups that tend to oppose new construction vehemently.

The state legislature recognized in 1982 that the "activities and policies of many local governments that limit the approval of housing" are a key contributor to the lack of housing supply.² The Housing Accountability Act (Cal. Gov. Code § 65589.5 et seq.) was enacted to curtail local obstruction to new housing projects. Described as California's "anti-NIMBY law," the HAA restricts the grounds on which local agencies can deny proposed housing development projects.³

The HAA has been on the books for almost forty years, and was recently strengthened in 2018. But for legislation that was enacted to "significantly increase the approval and construction of new housing," the HAA has resulted in only a handful of published opinions.⁴ This could cut two ways. Either the HAA is a paper tiger that has not had its intended effect, or, it is a useful tool that compels local agencies to approve code-compliant projects (so litigation never gets off the ground). This article outlines where the HAA has been, and where it might be going.

II. OVERVIEW OF THE HAA

The HAA has been characterized as a drastic measure that undermines local control over housing. And to a certain extent, it does limit the discretion of local agencies to deny projects. If a proposed project is code-compliant, a local agency cannot deny it, or reduce its density, for subjective reasons such as neighborhood compatibility or character.⁵ When it was first enacted, the HAA applied only to low-income housing, but it now promotes "the approval, development, and affordability of housing for all income levels," including market-rate housing.⁶

In simple terms, the HAA holds local agencies to the planning, zoning, and subdivision standards that they enacted; they cannot "ignore their own housing development policies and general plans when reviewing housing development proposals."⁷ A project that complies with all such standards must be approved, unless the local agency can find the project will have "specific, adverse" impacts that cannot be mitigated.⁸ In order to make the required "specific, adverse impact" findings for denial, the agency must find that the project would have a significant, quantifiable, direct and unavoidable impact based on objective, identified written public health or safety standards, policies or conditions in effect when the application was complete.⁹

If a housing development project is improperly denied, the HAA can be enforced by a petition for writ of mandate brought by the project applicant, a housing organization, or any person who would be eligible to live at the project.¹⁰ The courts can direct an agency to approve the project, and even impose fines if an agency has acted in bad faith or fails to comply with the court's order.¹¹

Importantly, the HAA reverses the usual burden of proof for a writ petition. In administrative writ cases, the onus is usually on the petitioner to show that the public agency has not proceeded in the manner required by law or has abused its discretion.¹² The HAA reverses this burden, providing that in any action challenging the denial or reduction in density of a housing project, "the city, county, or city and county shall bear the burden of proof that its decision has conformed to all of the conditions specified in Section 65589.5."¹³ The agency must be accountable for the loss of potential housing. If its decision is challenged, the agency has to prove it has complied with the HAA.

The burden on public agencies was heightened in 2018, when the HAA was amended to provide that a housing project:

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. . . shall be deemed consistent, compliant, and in conformity with an applicable plan, program, policy, ordinance, standard, requirement, or other similar provision if there is substantial evidence that would allow a reasonable person to conclude that the housing development project or emergency shelter is consistent, compliant, or in conformity.

(Gov. Code § 65589.5(f)(4).)

This "deemed consistent" language clarifies the standard of review for HAA cases, and represents an important departure from how the "substantial evidence" test usually operates. In administrative writ cases, an agency will usually prevail if it can show that its decision is supported by "substantial evidence." That is, the court cannot and does not act as a trier of fact, but reviews the administrative record to determine whether the agency's factual findings are supported by substantial evidence.¹⁴ Where the evidence permits inference either way, a trial court cannot reverse the agency's decision simply because a contrary result would have been equally or more reasonable.¹⁵

The HAA reverses this test, so that project applicants must be afforded the benefit of the doubt. This means that in an HAA lawsuit, a local agency does not enjoy the deference it is usually afforded; it must affirmatively justify its decision to deny a housing development project. If there is any substantial evidence that would enable a reasonable person to conclude the project is code-compliant, it must be approved.

III. LITIGATION UNDER THE HAA

Given that the deck is apparently stacked so decidedly in an HAA petitioner's favor, one would expect the HAA to be frequently invoked by developers who have had a project denied. In fact, there have been relatively few published HAA decisions, and even fewer that resulted in reversal of the agency's decision. Since its enactment in 1982, approximately forty cases have cited the HAA (including unreported decisions but excluding trial court orders).¹⁶ Only nineteen of those cases contain any substantive discussion that applies or interprets the HAA, as opposed to a tangential or incidental reference. And only one published decision—Honchariw v. County of Stanislaus—resulted in an order directing a local agency to set aside its disapproval of a housing project.¹⁷

Honchariw is the seminal reported HAA case.¹⁸ In this case, the project applicant proposed to subdivide a large parcel of land to build eight single-family homes. The County denied the project on the basis that the project site was "not physically suitable for the proposed development."¹⁹ The County also argued in the course of the litigation that the HAA did not apply to the project because it did not propose affordable housing. The Court of Appeal ultimately overturned the County's decision, finding that the project was code-compliant and the County had "not proceeded in the manner required by law" in denying it. The Court also confirmed that the HAA applies equally to market rate housing, and is not confined to the approval of affordable housing.²⁰

There are various possible explanations why there are so few reported HAA cases. It could be the case that the HAA's real power is at the administrative stage of the permitting process, where it can be wielded to compel approval of a project, without resorting to litigation. The HAA has also been strengthened in recent years,²¹ which has made it a more useful tool for developers by heightening the burden on agencies that want to deny a project. For example, the "deemed consistent" language in section 65589.5(f)(4) dramatically reduces the deference that is traditionally afforded to local agencies in land use litigation. This may make an HAA lawsuit a more attractive option to challenge a project denial than previously. Similarly, requiring local agencies to identify any areas of code noncompliance within a relatively short timeframe curtails their ability to come up with new reasons for denial at the later stages of the permitting process—such as a City Council hearing. But if a developer does sue, they may be more interested in compromising with an agency to achieve approval of their project than in setting a precedent under the HAA.

Despite the scarcity of published HAA opinions, a number of HAA lawsuits have resulted in a favorable outcome at trial, or a settlement agreement authorizing approval of the project. For example, in 2016 the Town of Los Gatos was ordered by the Superior Court to set aside its denial of a mixed-use development that included 320 residential units, because the Town had failed to make "written findings supported by substantial evidence" under the HAA.²² Also in 2016, the City of Gilroy approved a proposed affordable senior housing project, but imposed a condition of approval requiring the developer to install a sidewalk on public property. The developer sued, contending that the high cost of this condition was effectively a denial of the project, in violation of the HAA's ban on conditions that would render an affordable project infeasible to build.²³ The extent to which an agency may impose conditions on an approved project and the threshold for "infeasibility" are interesting untested questions under the HAA. They will remain untested for now, as the City of Gilroy settled this case and allowed the project to proceed without the sidewalk.²⁴

Several cases...