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Monday, April 26, 2021

California's 2021 RHNA Bills - Part 1

California's 2021 RHNA Bills - 1

All kinds of housing for all kinds of people

(Link to this post for sharing:

https://meetingthetwain.blogspot.com/2021/04/californias-2021-rhna-bills-part-1.html)

Summary:

We show that only 5% of CA cities and counties met their recent "Regional Housing Needs Allocation" goals and are therefore not subject to "streamlining".  ("Regional Housing Needs Allocation" is abbreviated RHNA and pronounced "Ree-nah".)  I.e., 95% of jurisdictions that failed to meet their RHNA numbers. 

We show using real examples of jurisdictions of all sizes that CA's Housing and Community Development agency's (HCD) RHNA numbers imply dramatically unrealistic growth in housing needs which therefore cannot be met by cities and counties.  

Recent public comments in favor of raising RHNA numbers suggest that intent of high RHNA numbers is not to add more housing but to remove any restrictions towns and counties might put on building.

We highlight 2021 California legislative proposals AB-215 (Chiu) relating to the RHNA goals.  The This assembly bill would provide monthly fines from $10,000 to $600,000 for a county or town that fails to meet their RHNA obligations. In other words, 95% of the jurisdictions in California would be paying monthly fines decided by a judge of up to $600,000/month

Other posts related to RHNA:

CA Housing Bills

The proposals relating to RHNA this year (2021) are:

  1. AB 215   - Assembly member Chiu - fines to $600,000/month if RHNA not met,
  2. AB 617   - Assembly member Davies - Allow areas to transfer RHNA goals,
  3. AB 1258 - Assembly member Nguyen - Allow judicial review of RHNA,
  4. SB 477   - Senator Scott Wiener - Cities/Counties to report progress in meeting RHNA,

Of these bills...

  1. AB-215 is truly objectionable.  AB-215 would basically be a huge indirect tax on residents of 95% of California cities & counties,
  2. AB-617 is a good idea but irrelevant since trading goals that can't possibly be met doesn't really address the root of the RHNA mess,
  3. AB-1258 is a very good bill since it would allow an independent judge to review the unrealistic  RHNA numbers,
  4. SB-477 is another costly and burdensome reporting requirement but reporting failure to meet goals which cannot be met is at best irrelevant.

Since only AB-215 (Chiu) is truly objectionable we will focus on that.  The bill can be found here:
https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220AB215

In short, it says that if the "housing element" of a city or county is not in "compliance", then after some review procedures, monthly fines starting at $10,000 going to $100,000 can be imposed by a judge.  If the housing element remains out of compliance that can be multiplied from three to six for a total monthly fine of $600,000 [Section 65585, sub-paragraphs (l)(1,2,3)]

It needs to be pointed out that the monthly fines up to $600,000 could be imposed irrespective of the population of the jurisdiction.

Background on RHNA

RHNA was established decades ago.  The idea was that California's increasing population needed more housing.   To assist cities and counties in planning for that housing the California Dept. of Finance estimates population growth which then become the basis for projected housing growth (RHNA numbers) for a region.  The RHNA numbers are administered by California's "Dept. of Housing and Community Development" (HCD).

Cities & counties don't actually build housing but simply authorize others to build it.  The only thing cities can do is zone land to accommodate projected growth.  Once the land is appropriately zoned to accommodate projected growth there is nothing else the city can do.  

Until recently, if no one built housing according to the RHNA numbers, HCD didn't do anything.  If the projected growth didn't happen, it was not presumed to be the fault of the city. That has changed with new legislation which implicitly assumes that cities can somehow induce buildings to be constructed by private development companies, or that it is only the cities that are holding back more housing from being built.

We show here:

  1. that RHNA numbers assume a rate of growth far higher than that of the last 30 years,
  2. that housing construction has kept up with population increase,
  3. that there are more housing units than households in every county in California,

We also propose ways to modify RHNA numbers to keep it line with realistic growth.

These facts are important because the proposed bills in the California legislature are based on the assumption that RHNA is a true assessment of future growth.  Therefore, the reasoning goes, if RHNA numbers are not met by a jurisdiction it must be the fault of the the jurisdiction.

Taking these items in sequence: 

                               RHNA Numbers are Unrealistic

California has 58 counties and 482 cities and towns (there is no legal distinction between a city and town) for a total of 540 jurisdictions.  Of those 540 cities and counties, HCD's 2019 "SB-35 Statewide Determination Summary" lists only 28 jurisdictions that comply with the RHNA numbers assigned them.  So, out of 540 jurisdictions only 5% (one in twenty) met their RHNA numbers.

Image 1: Intro segment of HCD 2019 SB-35

HCD's SB-35 Statewide Determination found at:

https://www.hcd.ca.gov/community-development/housing-element/docs/sb35_statewidedeterminationsummary.pdf

A look at the entire list of 28 jurisdictions shows that those meeting their RHNA numbers are small cities representing a tiny fraction of California's population.  RHNA numbers for counties do not refer to the entire population of the county but only the unincorporated parts of the county.  In populous counties like Santa Clara (nearly 2 million people) almost all of the population lives in incorporated cities which have their own RHNA numbers - the population under county control is very small.

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Some of the rationale given for assigning RHNA numbers is 'to ensure that all jurisdictions contribute to alleviating the housing shortage'.  The RHNA numbers for cities and counties are unrealistic and shows no relation to either historic growth patterns or any housing "shortage".  We show several examples of small, medium and large jurisdictions for which RHNA is unrealistic.

Examples of extraordinarily unrealistic RHNA allocations

At the small end, consider Alpine County.  It borders Nevada just South of Lake Tahoe.  It had a total population of 1,200 in 2000, 1,175 in 2010 and an estimated 1,129 residents in 2019.  Over 96% of the land in the county is US Park or National Forest.

Image 2:  Alpine County: Population 1,129 & Declining

5 housing units for every household
Failed to meet their RHNA goals and therefore subject to monthly fines up to $100,000.

According to the US Census, Alpine County (2019) comprised 350 households.  Home ownership is 84% as of 2019 compared to 64% for the US.  There are 1,782 housing units in Alpine County, i.e., about 5 housing units per household - meaning there are 1,432 are mostly empty vacation homes.  I.e., there are 4 empty housing units for every occupied one.

Image 3:  Alpine County: RHNA 
Alpine County RHNA mandated 11 "Above Moderate" housing units.
If only 10 were built Alpine could be subject to monthly fines up to $100,000 under AB 215.

With a population declining over 19 years, far away from the expensive coastal cities, almost everyone owning their home, and five housing units per household what is the possible justification for assigning any RHNA requirements at all to Alpine County?

For Alpine County it is clear that RHNA devoid of any rational purpose.  Are there any other counties in a similar situation?  It turns out that there are a baker's dozen counties like Alpine County with small and declining populations (from 2010 to 2018), excess housing units, and high home ownership.  Throw in two more that have trivial increases and we have 15 rural counties without a housing problem yet potentially subject to high fines under Chiu's AB-215.

13 Counties Losing Population (plus 2 that didn't gain much)

  1. Sierra County              (33)  Population decreased by 33
  2. Alpine County             (21)  Population decreased by 21
  3. Calaveras County      (421)         "          "                  421, etc. 
  4. Del Norte County    (1,389)
  5. Kings County          (1,320)
  6. Lassen County        (3,984)
  7. Modoc County             (74)
  8. Mono County             (380)
  9. Mariposa County       (122)
  10. Plumas County          (234)
  11. Siskiyou County         (288)
  12. Trinity County            (151)
  13. Tuolumne County      (625)
  14. Amador County             +3    Population increased by   3
  15. Inyo County                 +31    Population increased by 31
AB 215 would allow the imposition of monthly fines of from $10,000 to $100,000 on these counties.  For Alpine County, $100,000/month works out to about $100 per month for every man, woman and child or about $3,600 per year for the typical household - probably more than their property tax - solely because no builder decided to put up housing in a sparsely populated county with a 5-to-1 housing surplus, and a declining population where 85% own their own home.

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There are many small towns in California with declining populations as well.  Consider the town of Amador.  US Census 2019 population estimate of 190 down from 195 in 2000.

Image 4:  Amador City: Population 190 & Decreasing
For not building more housing they could get fined up to $100,000 per month

Amador is among the 95% of California cities and counties that failed to meet their RHNA.  As in Alpine County builders didn't construct enough "Above Moderate Income" housing units so they get the full brunt of state law, just like Alpine County - see image 5 below from 2019 HCD.

Image 5:  HCD Determination
Not enough "Above Moderate Income" housing built
298 Cities and counties so existing laws kick in.

On Page 2 of 6

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For middle-sized jurisdictions, consider Pasadena.  

Image 6:  Pasadena, California
Home to the Rose Bowl

Since 1990 it has grown from 131,591 residents to 141,029,  i.e., an increase of 9,438 residents over 30 years or 315 residents per year.  It now faces a RHNA of 9,409 housing units over the next eight years.  This means HCD's numbers imply housing for an additional 23,522 residents (based on Pasadena's current household size of 2.5 people) or 2.5 times more residents in the next 8 years than they have increased in the last 30 years.  In 8 years that averages 2,940 more residents every year from RHNA vs. the actual 315 annual population increase over the last 30 years.  This is nearly 10 times more growth than the historical acverage!

In other words, RHNA projects Pasadena will add 250% more population in 8 years than it has in the last 30 years.  If Pasadena doesn't meet these requirements, AB-215 allows monthly fines up to $100,000 which can be raised by a judge to $300,000 or later $600,000.

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For large jurisdictions, consider Los Angeles, California's largest city.  Since 1990 it has grown from 3,485,398 residents to 3,979,576 (2019),  i.e., just over 500,000 residents in 30 years or about 16,700 new residents per year.  LA's RHNA allocation for the next 8 years is 82,000 housing units as seen in LA's City Housing Element Plan (page 79).

At LA's current 2.8 person household size this implies a growth of 229,600 residents in 8 years or 28,700 residents per year vs. the 16,700 residents per year over the last 30 years.  This is an addition of 12,000 more residents per year than the 30-year historical average.  In other words, RHNA projects growth 170% above the 30-year actual growth rate.

Image 7:  Los Angeles, California
Nearly four million residents
Los Angeles
Growth of 16,700 residents per year over the last 30 years.
RHNA implies 28,700 residents per year over the next 8 years.
If not, AB-215 allows monthly fines up to $600,000.

Los Angeles in 2015 had 1,478,666 housing units for 1,383,869 households for a surplus of  95,000 housing units, i.e., nearly 7% more housing units than households.

Reason for Unrealistic RHNA numbers

The following SF Chronicle article from July-August 2020 makes it very clear that the point of higher RHNAs is to make sure cities and counties can't meet them.  



Quotes from article:

“If we got a RHNA number in line with the Southern California number, we would increase another 50%, which would mean more counties would not be hitting their number, which would mean that housing would be streamlined in those communities,”

"Matt Regan, who heads up policy at the Bay Area Council, a pro-business trade group, said he supports the highest possible number so that developers will be able to get quick approvals by doing 10% affordable."

When jurisdictions fail to meet their unrealistic RHNA goals, state mandated "streamlining" kicks in.  This means no public notices are required, and builders can put in only 10% "affordable housing" instead of city mandated numbers which are typically more like 15%.  There are also reductions or eliminations of off-street parking requirements.

Conclusion to Part 1

We have seen that failure to meet RHNA goals is not due to anything the cities and counties are, or are not doing but simply because RHNA is absurdly unrealistic in it's projections for growth.  RHNA needs to be radically altered, or simply abolished as it is extraordinarily unrealistic.

Part  2 will look at where the "housing crisis" exists and where it doesn't.