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HCD CIA

SPUR, YIMBYs say stealth state laws can force more housing

But what happens if developers don't want to build anything but luxury condos -- and maybe not even those?


On Friday, February 12, SPUR hosted a webinar entitled “Can Cities Use State Law to Overcome Housing Resistance?” The four panelists, all of the Yimby/Wiener persuasion, answered that question with a resounding Yes.

To anyone who’s depended on the mainstream media for an understanding of the current battle over California housing policy, that response must to be mind-boggling. The establishment press has claimed ad nauseam that the state has done little if anything to address California’s housing crisis.

Reporters have repeatedly memorialized the defeats of state Sen. Scott Wiener’s SB 827 (d. 2018) and SB 50 (d. 2019 and again in 2020) and the midnight-hour death of Assemblymember Toni Atkins’ SB 1120 in 2020, leaving the impression that these were the only housing bills or at least the only ones that mattered.

At Friday’s forum, the panelists told a different story. Since 2017, the state Legislature has enacted a slew of housing laws that, as former director of the Department of Housing and Community Development Ben Metcalf put it, “buil[t] out the power of the state” to overrule local land-use authority.Screen-Shot-2021-02-17-at-6-45-41-PM.png

Is HCD the new CIA?

Now the managing director of the Terner Center for Housing Innovation at UC Berkeley, Metcalf exulted that, thanks to the new legislation, “HCD has the potential to be moving much like the CIA. Most of the time its [work] is done below the waterline.”

As an example of such covert pressure, he cited 250 formal letters that HCD recently sent to California that noted violations of state law and concluded with a reference to the agency’s newfound legal authority to intervene in municipal planning.

Metcalf also applauded Newsom’s proposed creation of a Housing Accountability Unit.

Announcing the HAU in January, Newsom said:

“This is to monitor city council meetings. This is to monitor board of supervisor meetings, planning commission meetings. We’re not going to wait for an article to be written to be proactive in terms of holding local government accountable to increasing housing production.”

Metcalf called the proposal “exciting” and said that the HAU would be staffed by twelve new attorneys, including one at the top who would hold “a senior level post” at “the highest rank in civil service.”

Panelist Chris Elmendorf, a UC Davis law professor, encouraged local officials to collaborate with HCD by turning in their own cities—in his words, to “signal to HCD that [their city’s’] Housing Element was not adequately addressing” the jurisdiction’s legal mandate to plan for its fair share of its region’s housing. “Local knowledge,” said Elmendorf, “puts the substantive bite in state law.”

Yimby Law staffer and Seaside councilmember Jon Wizard gave the surveillance theme a more inclusive spin. (Yimby Law is the outfit that Sonja Trauss started in November 2019 after mysteriously departing from the California Renters and Legal Education Fund, which she’d co-founded.) As one of Yimby Law’s two Housing Element coordinators, Wizard trains and supervises volunteer cadres who assist HCD by reporting municipalities’ actual and prospective evasions of state housing law.

Moira O’Neill, a senior research fellow at UC Berkeley’s Center for Law, Energy, and the Environment, presented a PowerPoint review of research into “how cities process and approve housing.” She and her colleagues studied how in 2014-2017 sixteen California cities, including San Francisco, Oakland, San Jose, and Los Angeles, processed and approved housing for zoning- and plan-compliant projects of five or more units.

What delayed approvals, O’Neill said, was discretionary review. In response to my emailed query as to what she meant by that term, O’Neil cited design or architectural review. Her point resonated with her fellow panelists’ hostility toward democratic land use planning, which typically involves public hearings and other community-based forms of consultation, and their celebration of new state laws curtailing local discretion.

The discussion was framed by Elmendorf’s PowerPointed-overview of “what’s different this time.” He marked five factors:

“(Much) Bigger Housing Targets for Expensive Places”

Thanks to SB 828 (Wiener) and AB 1771 (Bloom), HCD has been able to impose exponentially larger Regional Housing Needs Allocations (RHNAs—pronounced ree-nuhs) on local jurisdictions. Since 1970, state law has required the Housing Element of each city’s general plan to include zoning that accommodates a portion of regional population growth. The latest RHNAs, Elmendorf observed, set “much bigger housing targets for expensive places.” The targets for Los Angeles and San Francisco, for example, are two-to-three times larger than the prior allocations.

“Realism About ‘Realistic’ Site Capacity”

AB 1397 (Low) and SB 6 (Beall) require Housing Elements to estimate the “realistic site capacity” for development. Previously, Elmendorf said, there was “no attention to the likelihood of a site being developed.” In the Q&A sidebar, I asked how a realistic likelihood of development can be determined. Wizard referred me to HCD’s site inventory guidebook. If any readers of this story can make or head or tail of that guidance, please share your insights. I pity the planners who have to follow its dictates. In the meeting proper, Wizard said that he’d “yet to see a single Housing Element that calculates the likelihood that a site will be developed.” I’m not surprised.

“A Duty to Affirmatively Further Fair Housing [AFFH]”

Mandated by AB 686 (Low), the “basic idea,” Elmendorf said, is that “sites zoned for low-income housing shouldn’t be concentrated in poor, historically disadvantaged areas of the city. Rather they should also be distributed in areas of opportunity.”

“A Duty to Approve Plan- and Zoning-Compliant Projects”

SB 167 (Skinner) and AB 1515 (Daly) amended California’s Housing Accountability Act, making it much harder for a city to reject a housing project or to reduce its density. Under SB 35 (Wiener), a town that’s failed to issue permits commensurate with its RHNA allocation loses its discretionary authority, meaning it has to approve projects without public hearings and environmental review.

With respect to SB 35, the Davis law professor’s heading is misleading. SB 35 is triggered by the issuance of permits, not approvals. But a city cannot require a developer whose project has been approved to pull a permit to build that project. Moreover, RHNAs encompass housing at all income levels, but developers are famously unwilling to build low-income housing, and cities cannot force them to abandon that reluctance. In other words, SB 35 sets up cities to fail, which is to say, to lose their land use discretion. Metcalf claimed that SB 35 is the thing [developers] are looking for. If it doesn’t apply, they look for another site.”

The last item on Elmendorf’s list of novelties was “Yimby watchdogging.” As he told it, “a new set of interest groups…are involved in the process from the ground up.” (Yes they are—and showered with money from the top down.) Their activism takes the pressure off housing developers, who are afraid of “poisoning the well”—that is, antagonizing cities from whom they’re seeking approval of their projects. Now the Yimbys—and HCD—can do the dirty work for them. To Elmendorf’s legislative catalog, Metcalf added AB 72 (Chiu), which authorized HCD to enforce state housing laws and to refer violations to the state Attorney General.

The upshot of these legal and political changes, Elmendorf conjectured, is that “the Housing Element update will be the single best opportunity for pro-housing reform at the city level for the next decade.”

This statement, too, calls for annotation. What Elmendorf and his comrades seek above all is not housing, and certainly not affordable housing, but rather the elimination of constraints on property capital. Their essential motive spurted out after another Zoomer, Michael Barnes, who was just termed off the Albany City Council, posed a question to Wizard in the Q&A sidebar. The Yimby Law staffer had observed that “not every site” that cities designate for development “gets activated.” Barnes asked:

“If developers are not building, why would throwing more approvals at them make them start to build? Have you spoken with any developers lately? We’re in the middle of a pandemic. Apartment rents are falling. Single family home prices are rising. Developers follow the market. How would you change that?”

Barnes’ question was predicated on the accurate perception that what drives real estate production is demand – and thus return on investment capital. Yimbys like to talk about developers, but not about how the real estate market really works. Witness Wizard’s reply:

“With the structure of the economy, nothing can ever make a private person/company build housing. Our goal is to remove arbitrary constraints, as Professor O’Neill described, so that development becomes more feasible and frequent. If the development community believes a once-Nimby city or county is less so, or even, dare I say, pro-housing, we expect the market to seek profits there.”

So, as Barnes subsequently observed to me in an email, this is really about “creating a free-fire zone” for the real estate industry. That the removal of legal constraints on the industry will result in “housing for everyone” remains unproven.

The “pro-housing” badge is also a cover for another less salable goal: a vision of infinite growth. As Wizard put it in the sidebar: “No city is built out. Everyone can go up.”

Interestingly, Wizard didn’t mention that Yimby Law, together with Yimby Action, is suing HCD because it thinks that the huge new RHNAs are much too small. His silence may have betokened a desire not to cue Elmendorf’s recently tweeted criticism of the suit: “right on the merits, maybe (probably) wrong on justiciability.” In plain English: it’s unclear whether anyone has the legal right to sue over RHNAs. (For Elmendorf’s fuller consideration of the matter, see his February 7 article in The California Planning and Development Report.)

Elmendorf questions only the legality of the Yimby suit. Like the other panelists, he fantasizes endlessly expanding growth. Nobody at the SPUR webinar mentioned any of the real-world threats to that fantasy: the requisite amount of schools, parks, water, sewage, police, fire, and, the space-defying potential of densification notwithstanding, land.