By Diana Elrod, Principal, LeSar Development Consultants
Since 1969, the State of California has required every jurisdiction to produce a plan to meet the housing needs of everyone in the community. That plan – called the Housing Element – is one of eight elements of a locality’s General Plan (the other Elements being land use, circulation, conservation, noise, safety, open space, and environmental justice). Together, the General Plan and its sub-plans help create the vision for a jurisdiction’s physical development.
The Housing Element stands out from the others because it is the only one that must be approved (“certified”) by the State of California; specifically by the Department of Housing and Community Development (HCD). Housing Elements usually run in cycles of eight years (in certain cases, five years), and many Housing Elements throughout the State are due to be revised in the next few years.
As long as I have lived in California (28 years!), critics of the Housing Element process claim that there is not enough enforcement to make sure cities and counties do their fair share to encourage housing development, especially affordable housing. But recent modifications in State law are changing what jurisdictions need to do to bring their Housing Elements into compliance. To understand these changes, we need to take a step back and first explain what RHNA (pronounced REE-nah) is – other than an often-bandied-about acronym – and how it fits in to the Housing Element.
The Regional Housing Needs Allocation (RHNA) process is a State-mandated activity. The Department of Finance provides demographic projections to HCD, which then uses a detailed methodology to turn those statistics into the number of new housing units Statewide by income category (extremely low-income, very low-income, low-income, moderate-income, and above-moderate income; you can see what those categories translated into as annual wages via the State and Federal Income Limits site).
HCD then determines where growth is expected to occur in each part of the State and allocates these units to various regional Councils of Government (COGs) and some counties without COGs. Using another methodology that must be approved by HCD, each COG then distributes its bulk allocation to individual jurisdictions within the COG.
While the Housing Element must contain a variety of community statistics to frame future housing needs, the lynchpin of the document is the inventory of local sites to accommodate the RHNA allocation. A jurisdiction must have enough land zoned at appropriate densities to ensure it can accommodate all of the units in its allocation. Cities can do this by identifying vacant land, but can also identify occupied sites that are underperforming or are underbuilt. For example, a marginally functioning tire repair shop, or a half-empty small office building could qualify. However, for these occupied sites, a city must prove it has a successful track record of redeveloping such sites.
What does “enough land zoned at appropriate densities” mean? We know that affordable housing is generally built as multifamily housing, which requires a higher density (units per acre) because of economies of scale. If the zoning only allows one unit per acre, basically the only thing that can be built on that site is a single-family house, which won’t be affordable in California (where the median home price is over half a million dollars). So, localities must have land zoned at higher densities to accommodate the number of lower-income units in their RHNA.
As many cities find themselves increasingly built out, the need to identify enough land becomes a critical challenge. A city may need to “upzone” land to a higher density to get more units, but planners need to make sure these changes don’t displace people already living there. And, as many communities are starting to realize, maybe the ideal American Dream of owning a single family home is outdated, like the State of Oregon and the City of Minneapolis, which are moving to ban most single family zoning.
California legislative changes in 2017 and 2018 are bringing greater scrutiny to the Housing Element process, primarily by strengthening standards of accountability. For example, HCD can now find a jurisdiction out of compliance at any time within a Housing Element cycle, rather than having to wait to the end of the cycle. If a Housing Element is deemed out of compliance, it means that developers can obtain a judgment in the courts allowing them to build in those communities “by right,” or without much in the way of local review.
In addition, new laws make it harder to deny a housing project (or conditionally approve the project if it provides fewer units than the zoning allows) by offering streamlined processes for development in underperforming jurisdictions if the project contains a certain percentage of affordable housing (see California Senate Bill 35), as well as placing a greater burden of proof on jurisdictions by shoring up the State Housing Accountability Act.
While it may seem that the State is taking away all local control and requiring cities to build units, in reality the RHNA allocations are still units to be accommodated, not built. Most cities do not develop housing themselves — but they can create incentives and programs to attract new development for all segments of the community. Local jurisdictions, indeed, can create the right environment for residential development to flourish at all income levels.