May 10, 2018

As Californians continue to slog through the housing affordability crisis, policymakers are paying increasing attention the state’s primary tool for ensuring that local governments plan for new housing. The Housing Element law requires cities and counties to zone enough land to accommodate expected housing growth at all income levels. But who decides how much growth is needed and where? And once the land is zoned for housing, what happens if it isn’t built?

How much housing do we need?

The California Department of Housing and Community Development (HCD) is charged with figuring out how much new housing is needed in each region. In developing the Regional Housing Needs Assessment (RHNA, pronounced “reena”), the Department is required to base their estimates on population forecasts from the Department of Finance. Then HCD works with regional councils of government (COGs) to calibrate and refine the numbers. (In very rural counties, HCD essentially serves a dual role as the COG).

After arriving at an “assessment” of the region’s housing needs, the COGs are charged with dividing up the growth numbers and giving each city and county an “allocation.” (Fun fact: the “a” in RHNA,” stands for either “assessment” or “allocation” depending on which part of the regional housing needs process you’re talking about).

Allocations among jurisdictions have to consider several objectives: promoting infill, linking jobs and housing, and attempting to balance the proportion of housing affordable to different income levels across jurisdictions. The final result for local agencies is a specific number of units divided between households at very-low, low, moderate and above-moderate income levels.

Local governments then must scour their jurisdictions to determine the existing capacity for new housing growth, including an inventory of sites adequate to accommodate the allocation. If adequate sites aren’t available, then the agency must commit in its housing element to rezoning sufficient land.

Does planned housing get built?

It’s easy to see why policymakers might want to “hold local governments accountable” for meeting their “housing goals:” it’s obvious that California needs more housing, especially in regions where the economy is booming and costs are skyrocketing, and it’s pretty straightforward to compare building permits pulled by developers to the allocations received by jurisdictions.

Unfortunately, it’s also clear that existing funding for subsidized housing is inadequate to bridge the massive gap between California’s 2.2 million lower-income households and our stock of 660,000 affordable rental units. On the market-rate side, while some communities are obviously resistant to housing growth, others have experience limited interest in new development, as rapidly-increasing construction costs exceed the market value of houses or rental apartments.

For the first time, a state law adopted in 2017 linked “RHNA performance” by jurisdiction with a specific development streamlining process. Other unsuccessful proposals have emerged over the years that attempted to make state funding for local governments contingent on whether housing growth meets or the jurisdiction’s allocation. CSAC has consistently opposed these efforts, but given the ongoing desire by policymakers to link housing production and state resources, counties have a compelling interest in ensuring that housing allocations are realistic and that they support other statewide policy goals.

In the coming weeks, CSAC will be publishing some of our analysis on the existing housing needs assessment process and its implications for unincorporated areas. At the CSAC Legislative Conference, the Housing, Land Use and Transportation Policy Committee agenda includes a detailed discussion on some of our findings, as well as two bills that seek to amend the housing needs allocation process, AB 1771 (Bloom) and SB 828 (Wiener) (our concerns letter on the latter bill is available here).