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By Gina Channell Wilcox

Tool to fight RHNA?

Uploaded: Aug 29, 2022

At the end of the July 26 Pleasanton City Council meeting, there was a topic brought by Councilmember Julie Testa about the city joining a coalition of other municipalities to fight back against the state's housing growth mandates over the Regional Housing Needs Allocation (RHNA) through a lawsuit.

The conversation came after many hours of discussion about the 2023-31 Housing Element. Every eight years the Pleasanton council and hundreds of other municipalities are required to identify suitable sites to accommodate the state-mandated number of housing units identified in their RHNA allotments.

The conversation was on the brink of violating the Brown Act, and the discussion stopped, leaving a void of information and a little trepidation.

Those who have been around Pleasanton for any length of time cringe when they hear the words “lawsuit” and “housing” in the same sentence. In 2006, the city was sued by Urban Habitat, an Oakland-based nonprofit, over the city’s 29,000-unit housing cap, which was put on a ballot and approved by voters in 1996.

In 2009, the city council decided to defend the housing cap measure, because it was the better of two bad choices. The only way the housing cap could be changed or canceled would be in a court decision or by another public vote. Putting it back on the ballot would cost more time and money, and likely produce the same result of an approved housing cap and subsequent lawsuit.

In 2010, the city negotiated a settlement, to the tune of $3.9 million, not including staff time. Urban Habitat received $1.9 million of that for their legal fees. As part of the settlement, the city was required to eliminate any reference to a housing cap from its General Plan and rezone additional acreage of available land for high density housing — apartments and townhouses up to 30 units per acre.

Residents can say they don’t want new housing because there isn’t enough water, it will have significant environmental impacts, there will be more traffic on the roads and students in the schools, or it will negatively change the character of the neighborhood / downtown / community.

They can even vote on a housing cap.

But the city and its voters have little choice but to accommodate its RHNA numbers as mandated by the state, and failure to do so has serious consequences.

Pleasanton and hundreds of other Northern California municipalities, or “jurisdictions,” received the RHNA numbers in late 2021, and many were taken aback by the increase.

In September 2021, Pleasanton had an estimated RHNA count of 4,900 new residential units for the upcoming Housing Element cycle, a 2.3-fold increase since the previous housing cycle. However, the Association of Bay Area Governments (ABAG), which determines the RHNA total for each Bay Area jurisdiction, put Pleasanton’s state-mandated number of units at 5,965 units.

Four of five Tri-Valley jurisdictions – the cities of Pleasanton, Dublin and San Ramon and the town of Danville, – appealed the new housing allotment with ABAG, arguing that their proposed new housing unit allotments during the 2023-31 cycle were excessive and asking for reductions. All were denied. In fact, according to John Goodwin from ABAG, there were 28 appeals among the members of the ABAG, and only one appeal was partially granted. As a result of this appeal, 35 RHNA units originally assigned to an unnamed Contra Costa County jurisdiction were transferred to the City of Pittsburg.

The lawsuit Testa referred to at the end of the meeting is being discussed by members of the California Alliance of Local Electeds (CALE), a statewide organization of current and former local elected officials.

CALE members, including Testa, advocated for a review of the state’s Department of Housing and Community Development methodology in formulating allocations that seem to many to be exceptionally high.

State Senator Steve Glazer (D-Orinda), whose district includes the Tri-Valley, is a member of the state’s Joint Committee on Legislative Audit and supported CALE’s recommendation for a review of the HCD’s assessment process.

In March, Michael S. Tilden, the acting California State Auditor, issued an audit of the HCD and the RHNA numbers, in which he pointed out myriad problems in HCD’s methodology. Among the key findings, Tilden reported HCD had not sufficiently reviewed and supported housing needs assessments. He also reported errors were made in assessments due to insufficient review and verification of data used and inadequate support for how necessary factors like housing projections and vacancy rates were determined.

In his letter to the Governor and legislative leaders, Tilden wrote, “Overall, our audit determined that HCD does not ensure that its needs assessments are accurate and adequately supported. …This insufficient oversight and lack of support for its considerations risks eroding public confidence that HCD is informing local governments of the appropriate amount of housing they will need.”

Glazer said, “It is these types of mistakes that undermine community trust and confidence in housing requirements. We need more affordable housing, and we have to do better.”

The reason the proposed lawsuit Testa referred to is different from previous ones is because this audit solidifies the RHNA numbers are questionable, and the audit can be used as a litigative tool not available in previous lawsuits.

The audit backed up a review of the RHNA determination process done by the Embarcadero Institute, a Northern California nonprofit that publishes data-driven analysis to give context to local policy. EI released a report in September 2020 that estimated that errors in the vacancy rate, inconsistencies between the Department of Finance’s housing unit projected and the unintended consequences of a bill passed in 2018 “caused the state’s Department of Housing and Community Development (HCD) to exaggerate by more than 900,000 the units needed in SoCal, the Bay Area and the Sacramento area.”

In other words, EI estimates that the HCD’s statewide requirement of 2.5 million housing units may be overstated by 900,000 units.

But Testa and Susan Candell, a CALE member and councilmember from the city of Lafayette, said after the audit, it’s probably closer to a million units overstated.

Candell and Testa said in the recent RHNA cycle, the sixth since its inception, some cities were given as much as 10 times the number of required housing units as they received in the previous cycle. But most have about double, which is still a significant increase.

“We’re being set up to fail,” Testa said, explaining that “out of all 480 cities across the state, about 20 were able to meet their RHNA from the fifth cycle, which were dramatically lower numbers.”

“We are being set up to fail,” Testa reiterated. “And why would they set us up to fail? Because when we fail, the penalties are severe and everything becomes ministerial. Basically, at that point, cities across the state will be handing the keys to the city to developers because we will have lost our local control.”
HCD is serious about enforcement.

“A housing element is no longer a paper exercise – it’s a contract with the state of housing commitments for eight years, and the Housing Accountability Unit will hold jurisdictions to those commitments,” said Megan Kirkeby, deputy director for housing policy, California Housing and Community Development department in an October 2021 press release.

“The governor, the attorney general, they’ve all made bold statements that they’re coming after the cities,” Testa said. “They flat out said they’re coming after us.”

The state requires jurisdictions to plan for an adequate number of housing units to accommodate its RHNA by adopting a compliant housing element by a deadline, which is Jan. 31, 2023 for ABAG members. This is just one step in many to be in compliance.

For noncompliance, a city can face, according to the HCD: “ineligibility or delay in receiving state funds that require a compliant housing element as a prerequisite;” a lawsuit brought by the California Office of the Attorney General for violations of State Housing Element Law; and court-imposed penalties for persistent noncompliance, including financial penalties – a minimum fine of $10,000 per month and up to $100,000 per month. (A court can multiply penalties up to a factor of six if the jurisdiction continues to remain noncompliant.)

According to HCD spokesperson Alicia Murillo, “Under the Housing Accountability Act, noncompliant jurisdictions cannot use inconsistency with zoning and general plan standards as reasons for denial of a housing project for very low-, low-, or moderate-income households.”

In other words, noncompliance means the state can direct where housing will be built, regardless of current zoning or the general plan.

Another obstacle in this cycle is what looks a lot like a mandate that a portion of the housing units be produced by the four-year mark, which municipalities have little control over.

Murillo would not confirm the production requirement, but said, “compliant housing elements will likely lead to much increased production. The bar of what a city or county must do to meet housing element compliance includes zoning, as well as programs to remove barriers and encourage that housing to happen.”

However, production is monitored, and there are consequences for not being “on track” – which sounds a lot like a mandate.

Annually on April 1, local jurisdictions must submit an annual progress report (APR) on the status and progress of implementing its housing element. If jurisdictions are not on track to meet their production goals they would have to offer streamlined ministerial approvals. This would allow developers of projects that meet certain criteria, such as affordability, the ability to get approval “in a non-discretionary way,” Murillo said.

Translated, the jurisdiction loses any authority over planning. Basically handing over keys to the city.

Murillo pushed back on the findings of the audit, acknowledging that there were errors identified but, “The audit found no significant problems with the methodology or instances of double counting,” she said.

“While HCD does not find errors in determinations acceptable,” she added, “it is important to note that the errors found in the audit resulted in marginal undercounting of units needed, not overprojection of housing need.”

“They found a couple little areas that were undercounted. We’ll concede that,” Testa said. “There are a few little areas with a couple thousand, but there are a million units that have been (overcounted).”

“We pushed so hard to get this audit thinking that when the auditor makes recommendations that the government agencies have to actually listen to them,” Candell said. “They don’t. There are no ‘teeth’ in the auditor’s report, which is the reason why we have to act. That’s why we have to act, to provide the accountability that needs to happen.”

“Our constituents deserve a fair and accurate process,” she said.

While there is an appeal process at the ABAG level, there is no equivalent action when it gets to the HCD level.
“There is no recourse other than the courts for cities to take if the numbers are wrong,” Candell said. “They don’t send the numbers out and let cities and the public weigh in. So the court is our only avenue to pursue against HCD.”

“By not using the audit as a litigation tool, we would be letting down our own cities and our own constituents,” Testa said.

While litigation is the only recourse, and the audit clearly states there are flaws in the data and methodology, Murillo said, “HCD remains confident in its approach to the 6th Cycle RHNA Determination, both from a legal and methodological perspective.”

I remain undecided in my support of a lawsuit. I need to be better educated before forming an opinion.

What I can say now, though, is that slowing – let alone stopping - housing growth is not feasible, and keeping local control is imperative.