A Time to Build? How Housing Element Law Reform and the Builder's Remedy Are Impacting Housing Production in California
| Publication year | 2023 |
| Citation | Vol. 32 No. 2 |
| Author | Justin A. Zucker |
AUTHORS
Justin A. Zucker1
Alex Klein2
Well into the state's sixth housing element cycle, Californians have become increasingly aware of the Housing Element Law and a penalty allowing bypassing of local land use control known as the "Builder's Remedy."3 The Housing Element Law is California's primary vehicle for coordinating residential growth among the state's 539 jurisdictions.4 Despite its lofty ambition, however, the Housing Element Law has historically done little to develop needed housing, functioning largely as a box-checking exercise for many local governments.
In 2017, that began changing dramatically due to legislative reform.5 The California legislature enacted a bundle of new legislation addressing the state's chronic housing shortage. Recent legislation, including Senate Bill ("SB") 828 (Wiener), SB 6 (Beall and McGuire), and Assembly Bill ("AB") 1086 (Daly) and AB 72 (Santiago), has empowered the California Department of Housing and Community Development ("HCD"), the agency responsible for administering the housing element process, to compel local governments to adopt and implement meaningful housing elements. These new laws have reformed Housing Element Law from a box-checking exercise into a process designed to ensure California cities and counties build sufficient housing.
As the sixth housing element cycle continues, local governments that failed to timely adopt compliant housing elements, such as the cities of La Cañada Flintridge and Santa Monica, are at the bleeding edge of this reform and the Builder's Remedy. There is limited case law interpreting application of the Builders Remedy and these new laws. As a result, it seems the outcomes of projects in those cities will be indicative of the future use of the Builder's Remedy across the state of California.
This article provides an overview how the Housing Element Law has historically (not) functioned, recent legislative changes that are upending the traditional housing element process, and the role of the Builder's Remedy for housing production in California.
THE HOUSING ACCOUNTABILITY ACT AND BUILDER'S REMEDY
Originally enacted in 1982, the Housing Accountability Act ("HAA") limits a local
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government's ability to deny, reduce the density of, or make infeasible housing development projects that comply with the local zoning code or general plan.6 The Builder's Remedy was added to the HAA in 1990.7 When a local jurisdiction has not adopted a substantially complaint housing element, an affordable housing project (as defined) not compliant with a local government's zoning code or general plan must nonetheless be approved.8 This is known as the Builder's Remedy.
Specifically, the Builder's Remedy removes a jurisdiction's local control for projects restricting twenty percent of the units as lower income or one hundred percent of the units as moderate income.9 To deny a housing project meeting this affordability criteria, a local government must make one of five statutory findings.10 One of the required findings is that the proposed project is inconsistent with both the local government's zoning ordinance and general plan, but the local government must have adopted a housing element in "substantial compliance" with the Housing Element Law.11 Consequently, local governments without substantially compliant housing elements must approve housing development projects satisfying the HAA's affordability requirements even if it is not compliant with their zoning ordinance or general plan.12
A local government, however, is able to deny a Builder's Remedy project if it has "adopted a housing element" that "is in substantial compliance with [the Housing Element Law], and the jurisdiction has met or exceeded its share of the [RHNA]."13 As discussed below, after recent changes to the Housing Element Law, a local government's ability to adopt a substantially compliant housing element has become a more rigorous process. The increased pressure on local governments to make meaningful reforms as part of their housing element programs has, in turn, increased the salience of the Builder's Remedy as a tool for residential development in California.
WITHOUT ENFORCEMENT MECHANISMS PRIOR HOUSING ELEMENTS DID NOT PRODUCE NEW HOUSING
THE HOUSING ELEMENT
Since its adoption in 1969, California has tried to use the state's Housing Element Law to coordinate and promote residential development among local governments.14 The Housing Element Law is premised on the idea that private markets can adequately address Californians' housing needs, provided local governments routinely address constraints on development.15 Local governments are required to plan to allow the private market to build housing for their communities.16
The housing element is a required component of every local government's general plan, which local governments must update once every five to eight years, i.e., a housing element cycle.17 Many California jurisdictions are currently in their sixth housing element cycle.18
In its housing element, a jurisdiction must formulate policies to accommodate anticipated residential growth and identify policies to ensure housing affordability.19 The driving metric for each local government in this process is the Regional Housing Needs Allocation, or RHNA (pronounced "ree-nah").20 The RHNA target represents the number of units of housing at varying levels of affordability that a jurisdiction must plan to accommodate over the course of its housing element cycle.21
A local government's RH NA target for any given housing element cycle is determined in a top-down fashion. HCD begins the process by determining the amount of housing needed for each region in the state.22 Next, regional councils of government (also known as COGs), which coordinate between local governments in particular California regions, apply a formula to allocate their region's housing needs among local governments within the region.23 Once local governments have been assigned their RHNA targets, each jurisdiction is responsible for formulating and adopting a housing element that will accommodate their RHNA target.24
Unlike other general plan components, however, the housing element is subject to numerous state law requirements. The Housing Element Law requires local governments to include in their housing element an inventory of available sites that could accommodate the local government's RHNA target, any proposed rezonings that the local government would need to accommodate their RHNA target, and an analysis and schedule for addressing and/or removing constraints on development.25 On paper, California's Housing Element Law would appear to provide a comprehensive vehicle for localities to adopt and plan for coordinated housing development. But historically, housing elements have failed to produce enough housing in California.
WHERE HOUSING ELEMENT LAW MISSED THE MARK
Notwithstanding the Housing Element Law being state law for more than half a century, California has been in a housing
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shortage that local governments are not adequately digging themselves out of.26 So how did the Housing Element Law miss the mark? One explanation for the lackluster results of California's Housing Element Law is HCD's previous lack of power to ensure local governments adopt and implement meaningful housing elements.27
In previous housing element cycles, HCD lacked authority to issue binding rules.28 Rather, HCD could issue advisory guidelines, which local governments were only obligated to "consider."29 Many local governments treated their RHNA target as advisory because the statute did little to punish noncompliant local governments.30 HCD faced an uphill battle if it chose to sue an offending local government in court over its housing element.31
Lawsuits challenging adopted housing elements were often unfruitful because the judicial standard of review to assess the validity of a housing element missed the mark.32 Courts typically applied a "substantial compliance" standard.33 This focused a court's inquiry merely on whether a housing element contained the components required by state law as opposed to evaluating whether the substance of housing element complied with state law.34 Housing elements were considered valid as a matter of law so long as local governments could proverbially "check the boxes," rendering the housing element process a rubber-stamping exercise.35
When parties sought to challenge a locality's implementation of their housing element, courts were often deferential to the locality.36 Courts would deem an implementation program or action consistent unless "no reasonable person" could determine the action was consistent with the jurisdiction's housing element.37 This lax standard allowed local governments to enact laws that subverted the programmatic goals expressed in their housing elements without fear of retribution. Courts would only enforce housing element provisions that were "fundamental, mandatory, and clear."38 There is a paucity of case law finding a provision of a housing element "fundamental, mandatory, and clear," suggesting that courts rarely, if ever, made such findings.39 As a result, municipalities had little incentive to adopt meaningfully pro-housing housing elements or adequately follow through with their implementation.
If local governments checked the boxes, up until the sixth cycle they were fine. As early as the 1990s, commentators found two out of every five municipalities and a quarter of counties were out of compliance with state Housing Element Law.40 This, however, undermined the state's effort to regulate regional and statewide housing development.
LEGISLATIVE HOUSING ELEMENT SHAKE-UP
Since the 2017 legislative session, the California legislature has strengthened the state's housing element process and the Housing Element Law.41 In particular, the Legislature has empowered...
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