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Weak-kneed legislators bowed to political pressure and special interest groups, yesterday, and voted to advance Senate Bill 828 to the Appropriations Committee. As amended, the latest version of Senator Scott Wiener’s bill, which was heavily supported by development interests, would increase every city’s Regional Housing Needs Assessment quota for low income units by 25% of the existing requirement. More significantly, it also changes that quota from a planning goal to a mandatory housing production quota, with heavy penalties to cities that fail to meet it.
This completely nonsensical and arbitrary legislation, primarily driven by “politically correct” rhetoric, may have dire economic, environmental and social consequences for all San Francisco Bay Area cities, except for San Francisco, San Jose and Oakland.
As reported by LBReport.com,
SB 828 would change… current RHNA numbers from state mandated "goals" for cities to incorporate into their local land use planning documents into de facto required outcomes, with any "deficiencies" in actually produced "needed" housing units rolled over to increase the number of housing units that a city must produce in subsequent planning periods.
That outcome could make it more difficult for some cities (already assigned high "needed" numbers) to meet the requirements of SB 35 (a bill authored by Sen. Wiener and enacted in 2017) that now requires cities to give "streamlined" approval to housing developers for multi-unit housing projects if a city hasn't met meet "needed" housing units.
Historically, the vast majority of Bay Area cities have been unable to meet the out sized, top-down quotas demanded of them. The reason is simple. Cities don’t build housing – private developers build housing.And, since the vast majority of Bay Area cities have no financial incentives to offer developers and very limited available land, it is assured that small cities will never be able to meet these new, compounding quotas, and will suffer significant financial consequences.
In addition to being required to provide developers with streamlining of the approval process (removal of review of impacts on traffic, parking, infrastructure, the environment, etc.), under SB 35 (passed in September 2017), “any reasonable person” (meaning, any outside advocacy group) can now sue cities for not meeting their RHNA mandates.
SB 35 also shifted the burden of legal proof on to cities, to show they made critical findings to not approve projects, and if they fail to do that, a judge can now assess unspecified financial penalties on non-compliant cities.
The negative financial consequences for small cities and their residents are incalculable.
Here are just some of the reasons that SB 828 is an insufferably bad piece of legislation:
The premise of SB 828 is flawed: Cities don’t build housing, private developers do.
SB 828 is based on the same fallacy as SB 827. It assumes that cities build housing in order to comply with their RHNA quota that is reflected in their Housing Element. This is untrue. Cities can only provide certain limited incentives but the market decides what type of development proposals are submitted. Because of this, it is unlikely that most of the municipalities in the San Francisco Bay Area would ever get out from under their endlessly accumulating, unbuilt RHNA quota.
The 125% RHNA figure in SB 828 is arbitrary and violates all existing RHNA calculation procedures and fact based “findings,” as required by state law.
Since its inception, the methodology for calculating the Regional Housing Needs Assessment figures is based on detailed and fact-based analysis of population growth and jobs growth. These studies are thorough and vetted and updated to reflect actual projections. The total RHNA allocation for a Regional Metropolitan Planning Organization (MTC/ABAG) is, therefore, a constantly changing number based on actual conditions.
As is, the RHNA adapts to statistically provable need. It is a dynamic methodology that already accomplishes what SB 828 attempts to do. Imposing a fixed 125% quota is not needed and is completely nonsensical
The 125% RHNA figure in SB 828 is arbitrary and unsupported by any reasonable economic, environmental or social impacts analysis.
The existing RHNA determination process by its very nature is reflective of credible economic, environmental and social impacts data, which is reflected in the population and jobs growth data it is based upon. To arbitrarily change the RHNA outcomes of that analysis, essentially negates the entire rationale for determining an accurate RHNA and turns the RHNA quota into a purely political tool driven by personal agendas and personal prejudices.
SB 828 is yet another naked attack on California's dwindling middle class and our livable suburban communities.
The 125% RHNA figure found in SB 828 is prejudicial against all but the largest cities in the state.
In the SF Bay Area, only three cities of the 103 municipalities will ever be able to meet the arbitrary 125% RHNA quota: San Francisco, Oakland and San Jose.The other municipalities and particularly smaller cities simply do not have the available land to do so. And, simply saying that single family zoned land can be transformed into multifamily zoned land in a way that makes housing development feasible is incorrect.
The requirement in SB 828 that the entire, original 100% of RHNA (still on the table) now be allocated to multi-family housing, negatively impact the economic tax base of all but the largest cities in the state and increase commuting times an environmental impacts.
Traditionally, the RHNA is divided into various percentages of each type of housing found in a city (based on federal statistical guidelines): from 30% of median income to market rate housing.SB 828 appears to require all the original RHNA (100%) to be allocated to multifamily housing, but without any income requirements.
One would assume that the other 100% will be allocated the same as it is now, among all the housing / income types, but the bill is not clear on this.
However, small cities simply do not have any economically viable land to designate for multifamily development except their commercial land (office, retail, industry). If that land is rezoned for housing, cities will lose their major tax base from commerce. This will turn more cities into bedroom communities of major jobs centers and increase commuting times.
In the context of SB 35, penalizing cities for failing to build housing may violate the unfunded mandate provisions of California Housing Law.
Legislation passed in September of 2017, particularly SB 35 but including other bills, have now created an unprecedented legal nexus of penalties between RHNA quotas and potential financial penalties and consequences for municipalities. As it now stands, if “any reasonable person” decides that a municipality has failed to do what it has to do to promote housing affordability and to fulfill its RHNA obligations, those persons can sue for damages and a court can assess financial penalties against a city.
It is our opinion that such an occurrence will constitute a violation of the California State Constitution and the unfunded mandate provisions, based on the state’s interpretation of Dillon’s Rule.
This has not yet been tested in the courts and suggests that legislators should exercise extreme caution before introducing additional housing laws, until the impacts of the 17 laws passed in 2017 are fully known.
SB 828 requires municipalities to now engage in compiling racial profiling data, in violation of federal Fair Housing laws.
Since 1937, California housing law has mirrored federal housing law and used income levels as the basis for assessing the need for “affordable housing” and determining the RHNA quotas.
SB 828 introduces the concept of and incorrectly mixes “racial” profiling into the Housing Element and RHNA process, which promotes racial profiling, discrimination and reverse discrimination and other abuses that are illegal under federal housing law. In addition, there are no legal standards, federal or state, to look to in order to interpret the findings being required by SB 828.
SB 828 requires municipalities to now engage in compiling “wealth” profiling data, in violation of federal Fair Housing laws, in that it proposes to penalize individual “wealth” as a special class.
Since 1937, California housing law has mirrored federal housing law and used income levels as the basis for assessing the need for “affordable housing” and determining the RHNA quotas. It is not based upon nor is it prejudicial against the personal wealth of individuals residing in a municipality.
SB 828 introduces the concept of “wealth” profiling into the Housing Element and RHNA process, which promotes reverse discrimination and other abuses that are illegal under federal housing law. In addition, there are no legal standards, federal or state, to look to in order to interpret the findings being required by SB 828.
SB 828 appears to give powers to unelected agencies over locally elected government, in violation of state law.
SB 828 indicates that unelected state and regional agencies (e.g., the Department of Housing and Community Development, the Metropolitan Transportation Commission, etc.) that are involved in the RHNA creation and allocation process, will have decision making powers over elected governments that are not subject to appeal.
As far as we know, this is unprecedented in California housing law.
SB 828 now heads to the state Senate's Appropriations Committee, a "non-policy" committee that's supposed to consider only fiscal impacts of proposed bills but as a practical matter operates as a majority-party controlled "gatekeeper" preventing bills from reaching the Senate floor if not supported by majority party (Dem) leadership. The Appropriations Committee is chaired by state Senator Ricardo Lara (D, LB-Huntington Park).
 Converting single family zoning to multifamily would likely increase "land" costs, because the land/house values of residential lots is much higher than fallow commercial acreage. For example, if a typical Marin County house is worth $1 million on a 50 x 100 lot (approx. 1/8th acre), so that's $8 million per acre in land cost to develop multifamily. At the same time, economically obsolete commercial parcels in town sell for about $4,000,000 per acre. If no one can “pencil” affordable housing now at $4 million per acre, how will they do it at $8 million per acre?
 See Footnote 1.