CC - Item 5B - SB 910 (DUNN) - Housing Elements : Fines, Penalties, And Lawsuits - OpposeTO HONORABLE MAYOR
AND MEMBERS
ROSEMEAD CITY COUNCIL
FROM: FRANK G. TRIPEPI, CITY MANAGER
DATE: APRIL 24, 2001
RE: SB 910 (DUNK)- HOUSING ELElvlENTS: FINES, PENALTIES, AND LAWSUITS -
OPPOSE
Attached for the City Council's review are copies of SB 910 (Dunn), current bill status, complete bill
history, Senate committee analysis, and a joint letter of opposition from the League of California
Cities and the California State Association of Counties. SB 910 passed out of the Senate Housing and
Community Development Committee on April 2 " on a 5 -1 vote with Senator Monteith abstaining.
Senator Ackerman cast the only NO vote. The bill is headed for the Senate Appropriations
Committee. The members of the Senate Appropriations Committee are Senators Alpert, Battin,
Bowen, Burton, Escutia, Johannessen, Johnson, Karnette, McPherson, Murray, Perata, Poochigian
and Speier.
This bill requires a court that finds that a local government's housing element is not in substantial
compliance with the state law governing housing elements, to levy a penalty not to exceed $1,000 per
unit ofthe total projected housing need for thejurisdiction, and award the plaintiff attorney's fees and
costs. This bill further provides that in any action filed on or after January 1, 2002, challenging the
validity of a housing element, there shall be a rebuttable presumption of non- validity of the housing
element or amendment ifthe Department of Housing and Community Development (HCD) has found
} that the element or amendment does not substantially comply with state law. The bill also includes
language stating the Legislature's intent to withhold state funding from any city, county, or city and
county that does not have a housing element in substantial compliance with state law, and to
redistribute the withheld funds to those jurisdictions that are in compliance. This bill would also
reduce your local subventions or the portion of the state's gas tax that is allocated directly to your
cities if your housing element is found out of compliance with HCD. Starting with a 20% reduction
and gradually increasing to 60% depending on how long you are out of compliance. Furthermore,
your portion will be reallocated back into the pool and redistributed to those who are in compliance.
Specifically, SB 910 was amended on March 27 °i to include a reduction in the percentage of the gas
tax that a city or county would receive unless the local government has an adopted housing element
that HCD has determined to be in substantial compliance by the following amounts:
F COUNCIL AGENDA
APR 2 4 2001.
ITEM No. —
• A 20% reduction for local governments whose third or subsequent revision of its housing
element has not been found by FICD to be in substantial compliance within 180 days of the
current deadline,
• A 40% reduction for local governments whose third or subsequent revision of its housing
element has not been found by FICD to be in substantial compliance within one year of the
current deadline;
• A 60% reduction for local governments whose third or subsequent revision of its housing
element has not been found by HCD to be in substantial compliance within two years of the
current deadline.
SB 910 would also: (1) return the withheld funds to the total pool available for redistribution in the
following month to eligible local governments; (2) states that an adopted housing element that has
been self - certified shall be deemed approved by FICD unless a court finds that the jurisdiction's
housing element is not in substantial compliance; and (3) requires FICD to provide to the Controller
on a monthly basis a list of local governments whose third or subsequent housing element revisions
have not been determined by HCD to be in substantial compliance, and shall report the deadline date
for each of the local governments on that list.
RECOMMENDATION:
It is recommended that the City Council oppose SB 910 (Dunn) and authorize the Mayor to send
letters of opposition.
SB 910 Senate Bill - Status Page 1 of 1
CURRENT BILL STATUS
MEASURE : S.B. No. 910
AUTHOR(S) Dunn (Coauthors: Senators Burton, Haynes, and Monteith).
TOPIC General plans: housing elements.
HOUSE LOCATION BEN
+LAST AMENDED DATE 03/27/2001
TYPE OF BILL :
Active
Non - Urgency
Appropriations
2/3 vote Required
Non- State - Mandated Local Program
Fiscal
Non -Tax Levy
LAST HIST. ACT. DATE: 09/05/2001
LAST HIST. ACTION Withdrawn from committee. Re- referred to Com. on RLS.
TITLE An act to amend Sections 65587 and 65589.3 of, and to
add Section 65585.5 to, the Government Code, relating to
general plans, and making an appropriation therefor.
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SB 910 Senate Bill - History Page 1 of 1
COMPLETE BILL HISTORY
BILL NUMBER : S.B. No. 910
AUTHOR Dunn
TOPIC General plans: housing elements.
TYPE OF BILL :
BILL HISTORY
2001
Active
Non - Urgency
Appropriations
2/3 Vote Required
Non- State - Mandated Local Program
Fiscal
Non -Tax Levy
Apr. 5 Withdrawn from committee. Re- referred to Com. on RLS.
Apr. 4 Set for hearing April 23.
Apr. 3 From committee: Do pass, but first be re- referred to Com. on APPR.
(Ayes 6. Noes 1. Page 514.) Re- referred to Com. on APPR.
Mar. 27 From committee with author's amendments. Read second time.
Amended. Re- referred to committee.
Mar. 20 Set for hearing April 2.
Mar. 15 To Com. on H. & C.D.
Feb. 26 Read first time.
Feb. 25 From print. May be acted upon on or after March 27.
Feb. 23 Introduced. To Com. on RLS. for assignment. To print.
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SB 910 Senate Bill - AMENDED
BILL NUMBER: SB 910 AMENDED
BILL TEXT
AMENDED IN SENATE MARCH 27, 2001
INTRODUCED BY ^ •-- psa�4 Ray- , ^a MpHtP4 +i,
Senator Dunn
(Coauthors: Senators Burton, Haynes, and Monteith)
FEBRUARY 23, 2001
An act to amend Sections 65587 and 65589.3 of and to add
Section 65585.5 to, the Government Code, relating to general
plans, and making an appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
SB 910, as amended, Dunn. General plans: housing elements.
(1) Existing law requires each city, county, or city and county to
prepare and adopt a general plan for its jurisdiction that contains
certain mandatory elements, including a housing element. A city,
county, a city and county is required to submit a draft housing
element or draft amendment to its housing element to the Department
of Housing and Community Development for a determination of whether
the draft complies with state law governing housing elements.
Existing law, until June 30, 2009, exempts any local government
within the jurisdiction of the San Diego Association of Governments
from this review requirement if it instead submits to the department
with its housing element a self- certification of compliance with
state law. In an action brought by any party to review the
conformity of a housing element with applicable state law, a court
review shall extend to whether the housing element, or portion
thereof or revision thereto, substantially complies with that law.
This bill would require a court, on a finding that there is not
substantial compliance, to award the plaintiff reasonable attorney's
fees and costs and to levy a penalty not to exceed $1,000 per unit of
the total projected housing need for the jurisdiction. The bill
would provide that all penalties shall accrue to the Housing
Rehabilitation Loan Fund. Because all money in this fund is
continuously appropriated to the Department of Housing and Community
Development for specified purposes, this bill would make an
appropriation.
(2) Existing law provides that, in any action filed on or after
January 1, 1991, challenging the validity of a housing element, there
shall be a rebuttable presumption of the validity of the element or
amendment if the Department of Housing and Community Development has
found that the element or amendment substantially complies with the
applicable law.
This bill would provide that, in any action filed on or after
January 1, 2002, challenging the validity of a housing element, there
shall be a rebuttable presumption of nonvalidity of the element or
amendment if the department has found that the element or amendment
does not substantially comply.
This bill would 4eelawe 4ie 'Rten€ e` the to
"' ^a s#ate €aRa 4 -ean require the
Controller to reduce by specified percentages the monthly allocation
of funds disbursed under various fuel tax laws to any city,
county, or city and county €4a4 a_,. R4 `a*e
whose third or subsequent revision of its housing element
is not in substantial compliance with state law and to
redistribute the money 4A " R^R ei-'- G@unt' GE '" es
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SB 910 Senate Bill - AMENDED
a ...,. e
in the following month. The bill would require the department to
report to the Controller monthly a list of noncompliant jurisdictions
. The bill would state that, for the purposes of this
provision, an authorized self- certification of a housing element
shall be deemed to have been approved by the department unless a
court finds that jurisdiction's housing element does not
substantially comply with state law .
Vote: 2/3. Appropriation: yes. Fiscal committee: yes.
State - mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS
SECTION 1. Section 65587 of the Government Code is amended to
read:
65587. (a) Each city, county, or city and county shall bring its
housing element, as required by subdivision (c) of Section 65302,
into conformity with the requirements of this article on or before
October 1, 1981, and the deadlines set by Section 65588. Except as
specifically provided in subdivision (b) of Section 65361, the
Director of Planning and Research shall not grant an extension of
time from these requirements.
(b) Any action brought by any interested party to review the
conformity with the provisions of this article of any housing element
or portion thereof or revision thereto shall be brought pursuant to
Section 1085 of the Code of Civil Procedure; the court's review of
compliance with the provisions of this article shall extend to
whether the housing element or portion thereof or revision thereto
substantially complies with the requirements of this article. If a
court finds that any housing element or portion thereof does not
substantially comply with the requirements of this article, the
court, in addition to any other remedy allowed by law, shall award
the plaintiff reasonable attorney's fees and costs and shall levy a
penalty not to exceed one thousand dollars ($1,000) per unit of the
total projected housing need for the jurisdiction as identified
pursuant to Section 65589. Any penalties shall accrue to the Housing
Rehabilitation Loan Fund established by Section 50661 of the Health
and Safety Code.
(c) If a court finds that an action of a city, county, or city and
county, which is required to be consistent with its general plan,
does not comply with its housing element, the city, county, or city
and county shall bring its action into compliance within 60 days.
However, the court shall retain jurisdiction throughout the period
for compliance to enforce its decision. Upon the court's
determination that the 60 -day period for compliance would place an
undue hardship on the city, county, or city and county, the court may
extend the time period for compliance by an additional 60 days.
SEC. 2. Section 65589.3 of the Government Code is amended to read:
65589.3. (a) In any action filed on or after January 1, 1991,
taken to challenge the validity of a housing element, there shall be
a rebuttable presumption of the validity of the element or amendment
if, pursuant to Section 65585, the department has found that the
element or amendment substantially complies with the requirements of
this article.
(b) In any action filed on or after January 1, 2002, taken to
challenge the validity of a housing element, there shall be a
rebuttable presumption of the nonvalidity of the element or amendment
if, pursuant to Section 65585, the department has found that the
element or amendment does not substantially comply with the
requirements of this article.
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SB 910 Senate Bill - AMENDED
SEC. 3. Section 65585.5 is added to the Government Code, to read:
65585.5. (a) The Controller shall reduce by the following
percentages the monthly allocation of funds dispersed pursuant to
subdivision (d), (e), or (f) of Section 2104 and Sections 2105, 2106,
and 2107 of the Streets and Highways Code to any city, county, or
city and county unless the city, county, or city and county has an
adopted housing element that the Department of Housing and Community
Development has determined pursuant to Section 65585 to be in
substantial compliance with the requirements of this article:
(1) The allocation shall be reduced by 20 percent for a city,
county, or city and county whose third or subsequent revision of its
housing element has not been found by the department to be in
substantial compliance within 180 days of the deadline established by
Section 65588.
(2) The allocation shall be reduced by 40 percent for a city,
county, or city and county whose third or subsequent revision of its
housing element has not been found by the department to be in
substantial compliance within one year of the deadline established by
Section 65588.
(3) The allocation shall be reduced by 60 percent for a city,
county, or city and county whose third or subsequent revision of its
housing element has not been found by the department to be in
substantial compliance within two years of the deadline established
by Section 65588.
(b) Any funds withheld from a city, county, or city and county
pursuant to this section shall be added to the total pool of funds to
be allocated and disbursed in the following month.
(c) For the purposes of this section, an adopted housing element
that has been self- certified pursuant to Section 65585.1 shall be
deemed to have been approved by the department, unless a court finds
that the jurisdiction's housing element does not substantially comply
with this article.
(d) The department shall report to the Controller by the 20th day
of the month a list of cities, counties, and cities and counties
whose third or subsequent housing element revisions, as of the 15th
day of that month, have not been determined by the department to be
in substantial compliance with the requirements of this article. The
department shall also report the deadline date for the third or
subsequent housing element revision established in Section 65588 for
each respective jurisdiction on that list.
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SB 910 Senate Bill - Bill Analysis
SENATE HOUSING & COMMUNITY DEVELOPMENT COMMITTEE
Senator Joseph L. Dunn, Chair
Bill No: SB 910 Hearing:April
2, 2001
Author: Dunn Fiscal:Yes
Version: March 27, 2001 Consultant:Mark
Stivers
HOUSING ELEMENT ENFORCEMENT
Background and Existing Law
The Planning and Zoning Law requires cities and counties to
prepare and adopt a general plan to guide the future growth
of a community. Every general plan must contain seven
elements: land use, circulation, housing, conservation,
open- space, noise, and safety. A housing element must
identify and analyze existing and projected housing needs,
identify adequate sites with appropriate zoning to meet the
housing needs of all income segments of the community, and
ensure that regulatory systems provide opportunities for,
and do not unduly constrain, housing development.
Cities and counties must revise their housing elements
every five years, following a staggered statutory schedule.
Before each revision, the regional council of government
(COG), in conjunction with the Department of Housing and
Community Development (HCD), prepares a regional housing
needs assessment (RHNA) and allocates to each jurisdiction
in the region its fair share of the housing need for all
income categories. Each community's identification of
adequate sites must satisfy the housing allocation targets
set by the COG.
Prior to adopting or amending a housing element, a local
government must submit a draft to HCD for review. The
department is required to report within a specified time
schedule its written findings as to whether or not the
draft element or amendment substantially complies with the
law. If HCD finds that the draft does not comply with the
law, the local government is required to bring the draft
into compliance or adopt the draft with written findings
SB 910
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which explains why the jurisdiction believes the housing
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S 910 Senate Bill - Bill Analysis
element complies with the law despite the department's
findings. Within 120 days of the final adoption of a
housinc element or amendment, HCD is required to review the
final document and report its findings as to whether the
housing element complies with state law.
Either the Attorney General or a private party may bring
suit to enforce housing element law. In any such legal
action, there is a rebuttable presumption that a
jurisdiction's housing element is valid if HCD has found
that the element substantially complies with state law. If
a court finds that a local government has not substantially
complied with the law, the court may order the jurisdiction
to bring its housing element into compliance within 120
days and /or halt any or all further development in the
community until the housing element is brought into
compliance.
Proposed Law
Senate Bill 910 creates sanctions for local governments
that fail to comply with state housing element law.
Specifically, the bill:
Creates a rebuttable presumption that, if HCD finds a
jurisdiction substantially out of compliance with housing
element law and a suit challenging the validity of the
element is filed, the jurisdiction's element will be
presumed by a court to be invalid.
Makes explicit that plaintiffs who successfully challenge
the validity of a community's housing element may recover
their reasonable costs and fees.
Requires a court to assess penalties against a
jurisdiction whose housing element the court has found to
be invalid. The court may determine the appropriate fine
amount up to $1000 per unit of total projected housing
need for the jurisdiction as identified in the regional
housing needs assessment process. All fines are
deposited in the state's Housing Rehabilitation Loan
Fund, which is used to develop affordable rental housing
through the Multifamily Housing Program.
Requires the Controller to withhold a specified
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SB 910
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percentage of street and highway maintenance and repair
funds from a local government that has not adopted a
housing element that HCD has found to be in substantial
compliance with the law. The amounts to be withheld are
calculated according to the following schedule:
? For the first six months after the community's
deadline date for the third or subsequent update of
its housing element, no funds are withheld.
? After six months, 20% of each monthly allocation is
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SB 910 Senate Bill - Bill Analysis
withheld.
After one year, 409 of each monthly allocation is
withheld.
After two years, 609 of each monthly allocation is
withheld.
Any funds withheld are required to be added to the total
pool of funds to be distributed in the following month to
all local governments according to existing formulas.
The housing elements of jurisdictions within the San
Diego Association of Governments who have elected to
self- certify their housing elements under a special pilot
program are deemed to have been approved by the
department unless a court has found the element to be
invalid. The bill further requires HCD to provide the
Controller each month with a list of jurisdictions whose
housing elements have not been approved and the dates for
which each of these elements was due.
Comments
1. Purpose of the bill In order for the private market
to adequately address existing need and new demand for
housing, local governments must adopt land use plans and
regulatory systems which provide opportunities for, and do
not unduly constrain, housing development. While the large
majority of cities and counties in the state have adopted
adequate housing elements, roughly 309 of the state's local
jurisdictions have failed to comply with the law. The
result is that developers cannot access land or the
entitlements they need to produce new housing, exacerbating
the state's housing crisis. By shirking their
responsibility to make land available for their fair share
of the region's housing needs, these local governments
effectively raise the price of housing for working families
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even higher and force surrounding jurisdictions to take on
a larger housing burden.
According to the author, current housing element law lacks
teeth. Enforcement depends on private developers or
non - profit lawyers suing local governments for
non - compliance. In instances where the court does find
cities or counties out of compliance, the remedies are
limited. The court may order the jurisdiction to bring its
housing element into compliance and may halt development in
the community in the meantime. For local governments that
do not have major commercial or industrial projects
pending, this is equivalent to no remedy at all. While HCD
currently reviews all housing elements for compliance with
state law, there are almost no sanctions for jurisdictions
whose elements are found to be inadequate.
Recent legislation created the Jobs Housing Balance
Improvement Program which rewards cities and counties for
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SB 910 Senate Bill - Bill Analysis
increasing the overall number of homes they permit. In
some cases, incentives like these will provide sufficient
reason for a local government to adopt a valid housing
element. In other cases, communities may still choose to
pass up financial incentives. In these instances, the
author believes that sanctions are both necessary and
appropriate to ensure that all communities meet their fair
share of the state's housing need.
2. Good for the goose and good for the gander Current
law creates a legal presumption that a local government's
housing element is valid if it has been approved by HCD.
However, no similar presumption exists if HCD finds the
jurisdiction's housing element to be inadequate. The
committee may wish to consider whether the presumption
should work both ways as opposed to just in favor of a
local government.
3. Automatic attorney's fees and costs In most cases
where the adequacy of a housing element is successfully
challenged in court, the plaintiff is able to receive
reasonable fees and costs. State law allows the court to
make such awards if the case results in enforcement of an
important right affecting the general public and if a) a
significant benefit has been conferred on the general
public or a large class of persons; b) the necessity and
financial burden of private enforcement are such to make
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the award appropriate; and c) in the interest of justice
such fees should not be paid out of any recovery. The
committee may wish to consider whether enforcement of
housing element law generally meets these tests so as to
make an automatic award appropriate.
9. Ar guments in o The League of California
Cities and the California State Association of Counties
argue that local governments are not the only or even main
reason that the state's housing needs are not being met.
They believe that this bill casts local officials as
uncaring about their communities and is overly punitive.
They raise the following specific points:
The rebuttable presumption of nonvalidity "elevates the
opinion of an HCD staff member above the opinion of a
judge" and subjects local governments to over - zealous
interpretation of the law by the state.
With respect to attorney's fees, the question of whether
a significant benefit derives from the court challenge
should be left for a judge to decide.
The ability of the court to halt development is
sufficient remedy for non - compliance with housing
element law and monetary penalties are therefore
inappropriate.
Withholding state road repair funds from non- compliant
jurisdictions will reward those who "collaborate" and
punish those who "question the assumptions [of HCD] or
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SB 910 Senate Bill - Bill Analysis
mention local realities." As opposed to incentives,
withholding funds will further jeopardize state and
local government relations.
Housing element compliance is a convenient target for
the lack of progress on larger housing supply issues,
such as local government tax reform, state financing for
affordable housing, and construction defect litigation.
Supp and O (3/27/)
Support: Job - Center Housing Coalition (co- sponsor)
California Rural Legal Assistance Foundation
(co- sponsor)
Western Center on Law and Poverty (co- sponsor)
Apartment Association California Southern Cities
Asian Law Alliance, San Jose
Barbara Sanders and Associates
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Berkeley Property Owners Association
Burbank Housing Development Corp., Santa Rosa
California Apartment Association
California Building Industry Association
California Church Impact
California Federation of Labor, AFL -CIO
California Housing Council, Inc.
California Network of Neighborhood Programs
California Reinvestment Committee
California State Association of Electrical
Workers
California State Pipe Trades Council
Chico Housing Improvement Program
Children Now
Children's Advocacy Institute
CHISPA, Salinas
City Heights Community Development Corporation,
San Diego
Civic Center Barrio Housing Corp., Santa Ana
Coachella Valley Housing Coalition, Indio
Coalition for Economic Survival, Los Angeles
Community Resource Associates, Clayton
Congress of California Seniors
Council of Community Housing Organizations, San
Francisco
East Bay Asian Local Development Corporation,
Oakland
Eden Housing, Hayward
Enterprise Foundation, Los Angeles
Friends Committee on Legislation of California
Friends of the Homeless, Santa Rosa
General Assistance Advocacy Project, San
Francisco
Great Northern Corporation, Weed
Gubb & Barshay, LLP, San Francisco
Harbor Interfaith Shelter, San Pedro
Homeward Bound of Marin
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SB 910 Senate Bill - Bill Analysis
Housing Authority of the County of Santa Clara
Inglewood Neighborhood Housing Services
JRT and Associates, Sausalito
La Raza Centro Legal, Inc., San Francisco
Los Angeles Housing Law Project
Lutheran Office of Public Policy California
Mercy Housing California
Mid - Peninsula Housing Coalition, Redwood City
Minority Apartment Owners Association
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Napa Valley Community Housing
Neighborhood House Association, San Diego
Nevada County. Housing and Community Development,
Nevada City
Older Women's League
Orange County Community Housing Corp., Santa Ana
Pajaro Valley Housing Corporation, Watsonville
People's Seif -Help Housing Corporation, San Luis
Obispo
Preservation Properties, Santa Monica
Protection and Advocacy, Inc.
Related Companies of California
Renee Franken Associates, Sacramento
Rubicon Programs, Inc., Richmond
Rural Communities Housing Development
Corporation, Ukiah
Sacramento Gray Panthers
Sacramento Mutual Housing Association
Sacramento Neighborhood Housing Services
Santa Barbara Rental Property Association
Santa Clara County Housing Action Coalition
Senior Housing Action Collaborative, San
Francisco
Shelter Partnership, Los Angeles
Sisters of Saint Joseph's of Carondelet, Los
Angeles
South County Housing, Gilroy
Southern California Association of Non - Profit
Housing
St. Peter's Housing Committee, San Francisco
The Tenderloin Housing Clinic
The Agora Group, Goleta
The Fair Housing Council of San Diego
Venice Community Housing
West Hollywood Community Housing Corporation
Western States Council of Sheet Metal Workers
Westside Fair Housing Council, Los Angeles
WNC Associates, Costa Mesa
Opp osition .
City
City
City
City
City
City
C
of
of
of
of
of
of
3iifornia State Association of Counties
Arcata
Gustine
Concord
Foster City
Monrovia
National City
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SB 910 Senate Bill - Bill Analysis
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SB 910
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City of Sand City
City of Stockton
League of California Cities
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League of California Cities
1400 K Street, 4 "' Floor
Sacramento, CA 95814
(916) 658 -8200
March 21. 2001
Senator Joe Dunn
State Capitol, Room 2080
Sacramento, CA 95814
California State Association of Counties
1100 K Street, Suite 101
Sacramento, CA 95814
(916) 327 -7500
RE: SB 910 (Dunn). Housing Elements. Fines, Penalties, and Litigation.
Notice of Opposition
Dear Senator Dunn:
We regret to inform you that the League of California Cities (League) and California State Association of
Counties (CSAC) OPPOSE your SB 910 as introduced. In brief, this measure:
1) Establishes a legal rebuttable presumption of nonvalidity for a housing element or amendment
if the Department of Housing and Community Development (HCD) has found that the element or
amendment does not substantially comply with state law, for any lawsuit filed after January 1, 2002.
2) Requires a court to levy a penalty up to $1,000 per unit of the total projected housing need for
a city or county, if the court finds that a local government's housing element is not in substantial
compliance with the state law governing housing elements, in addition to awarding plaintiffs attorney's
fees and costs.
3) Establishes legislative intent to withhold state funding from any city, county, or city and county
that does not have a housing element in substantial compliance with state law, and to redistribute the
withheld funds to those jurisdictions that are in compliance.
Before addressing the specifics of this proposal, we would like to convey a perspective from local
governments, that are just one partner in the shared responsibility of meeting the housing needs of the
state's citizens. We completely object to this measure which appears to cast local governments and
their locally elected officials in a very negative light, such that they must be fined, sued, forced, and
threatened into compliance with the state over a state supervised process called the housing element.
Local elected officials care deeply about their communities and the many needs of their constituents.
Local elected officials constantly struggle with limited property tax resources, and scarce housing
subsidies from either the federal or state level to meet the affordable housing needs of their citizens.
Local elected officials and their planning staff pack conference rooms at HCD workshops and forums to
gather information on what is needed for their housing elements. They allocate tax dollars to hire staff
and consultants to help them through the Byzantine housing element process that extracts significant
costs, time, and attention with sometime questionable results. We strongly disagree with casting local
elected officials as uncaring about their communities and question the productiveness of such an
offensive approach.
As you know, California's 475 cities and 58 counties vary greatly in size, climate, topography and
economic conditions. Some cities are land- locked with growing populations and little available land,
other cities are facing booming job markets with high paid workers where the competition for housing
drives the price of the smallest cottage over half a million dollars. Still other cities, with adjacent base
closures, are in depressed economic markets with blocks of vacant housing and retail stores. While
counties are constantly relied upon to provide open space, habitat preservation and agricultural
opportunities, and often scrutinized by labeling county development as "sprawl." All of these cities and
counties, through their elected representatives, are striving to improve the quality of life and
opportunities for their citizens. Having available affordable housing plays a critical role in the creation of
a community, but as you know, just as in the Legislature, housing is not the only issue. Public safety,
libraries, education, parks, public works, flood control, air quality, protecting the environment, open
space, protecting agricultural lands, these are other issues which elected local officials must grapple with,
in addition to meeting an array of existing stale mandates and providing state services in the health,
welfare and justice arena, as well as preparing for the many additional state mandates proposed in the
Legislature each year.
Now that some context has been established, here are our specific issues with this bill:
1) This Bill Shifts the Legal Standard From Innocent Until Proven Guilty to Guilty Until
Proven Innocent:
Under existing law, if HCD determines that a housing element is in substantial compliance with state law,
the housing element is presumed to be valid, thus creating for the local government a legal "safe harbor"
which protects a local government in a legal challenge to its general plan: a very valuable feature.
However, under existing law, section 65585(f) Government Code, local governments have the choice of
either amending the draft element to comply with HCD's recommendations, or to self - certify and adopt
the draft element with findings on why the local government believes that the draft element substantially
complies with the requirements of the law despite HCD's findings. This flexibility has the effect of
tempering the potential for an overly - zealous interpretation of the law by the state. Just because a state
official fails to pronounce a housing element in substantial compliance with state law does not mean a
judge will feel the same way. Therefore, if a local government believes that a state official is requesting
unreasonable changes to a local housing element, and their attorney advises them that they have a well -
prepared element that complies with state law, then the local government is free to run the risk of being
challenged without the safe harbor provision, if they feel that they can fairly argue before a Court that
their element complies with the provisions of state law even absent the "substantial compliance" blessing
by HCD.
This bill, however, by establishing a rebuttable presumption of nonvalidity, creates a legal presumption
that a local housing element is invalid if it has not been deemed in substantial compliance with slate law
by HCD, and therefore subjects the local government to all the fines, penalties, and legal actions
promoted by this legislation. What is particularly offensive about this approach is the presumption that
the local government is a bad actor and somehow criminal when HCD fails to determine their housing
element in compliance, when the reality may be that the local government has struggled to comply with
the edicts of the state and has produced an element that meets 98 percent of HCD's requirement, but the
state rejects the entire element over a few minor points. Furthermore, the "guilty until proven innocent"
approach has the effect of injecting state workers directly into the "approval" business of local general
plans. Those local officials who fail to respond to every potentially questionable demand of the state
official reviewing their element, will be exposed to a barrage of fines and penalties for daring to question
the discretion, wisdom, and rationale of state officials. In short, this is a recipe where the "rebuttable
presumption of nonvalidity" elevates the opinion of an HCD staff member above the opinion of a judge.
2) Effect of "Presumption of Nonvalidity" on Pending Development Projects Merits
Consideration:
If there is a rebuttable presumption on "nonvalidity" for any housing element, which HCD fails to view in
substantial compliance, then there are some serious potential consequences for both local governments
and developers. Aside from all the fines, penalties, and additional diversions of local revenues by the
state against the local government, the presumption of nonvalidity immediately calls into question the
validity of the entire general plan because local general plans are required to be internally consistent. If
the local general plan is inconsistent, than any local decision made by the local government -- issuing
building permits, approving subdivision maps, adoption of zoning ordinances, approving development
projects - -based upon that general plan are also subject to legal challenge. See Government Code
section 65755; Camp v. Board of Supervisors, 123 Cal. App. 3d 334, 358 -60 (1981); Save El Toro Assn
v. Days, 74 Cal. App. 3d 64, 70 -74 (1977). Those who oppose growth in this state will no doubt welcome
this new opportunity to litigate using the legal leg -up provided by the presumption of nonvalidity.
3) Mandatory Attorney's Fees
SB 910 ignores the existing well - established way of determining whether plaintiffs are entitled to their
attorneys' fees and makes the award of fees automatic, thus encouraging additional litigation.
There are currently two sources of attorneys' fees awards: Government Code section 800 and the
private attorney general theory (CCP 1021.5). Section 800 awards fees when the action of the city was
the result of arbitrary or capricious action. (An error by an official, even if clearly erroneous, does not
rise to the level of arbitrary or capricious action). The cap on this award is $7500.
The greater exposure is under the private attorney general theory. Under CCP 1021.5, the court MAY
award fees if (a) a significant benefit has been conferred on the general public or a large class of
persons; (b) the necessity and financial burden of private enforcement is such as to make the award
appropriate, and (c) the case involves an important right affecting the public interest. The focus is on the
impact of the action in achieving the desired result, not the manner of its resolution.
These questions of whether there has been a "significant benefit" and whether it was necessary to bring
the litigation are questions that should be left for a judge to decide.
4) This Bill Treats Local Elected Officials As Criminals:
This bill imposes a "penalty" of up to $1,000 per unit of a jurisdiction's regional housing need if a court
finds that a housing element or a portion of it fails to substantially comply with the requirements of the
law. For instance, this bill proposes to levy a fine of $66.7 million dollars, in addition to whatever
additional penalties the Legislature plans to attach to this bill, against the Cities of Moreno Valley,
Hemet, Victorville, Chino Hills, and the Counties of Riverside and San Bernardino for having the
audacity to contest a flawed Regional Housing Needs Allocation process in their current lawsuit against
both the Southern California Association of Governments and HCD based on 12- year -old census data
that fails to reflect the economic realities of the region and proposes an additional 66,700 units be
allocated to local governments who contend their communities have an over - supply of housing and lack
available jobs for their residents.
5) Bill Ignores the Existing Powers of the Courts To Enforce Housing Element Law:
Under existing law, if a court ruled that a local government's general plan failed to comply with existing
law, the community's general plan would be suspended until an adequate plan was adopted. Section
65755 already re wires a court to include in an order or judgment, which invalidates a local general plan
one or more of the following provisions:
(1) Suspend the authority of the city, county, or city and county to issue building permits, or any category
of building permits, and all other related permits.
(2) Suspend the authority of the city, county, or city and county, to grant any and all categories of zoning
changes, variances, or both.
(3) Suspend the authority of the city, county, or city and county, to grant subdivision map approvals.
Is this not sufficient enforcement authority for the courts? We find it inappropriate for the state to exact
additional fines and divert additional local revenues if a local government happens to have a difference
of opinion with a state plan reviewer who may not fully understand the trade -offs and difficult choices
facing the local elected officials.
6) Proposal to Divert Additional Local Revenues:
In addition to all the fines and penalties proposed in this bill to be levied against any local government
that questions the facts, figures, or interpretation of state employees of HCD, this bill contains intent
language as a placeholder for additional provisions which will be added into this bill, to divert additional
local revenues away from local governments to other local governments who have housing elements
which HCD has determined to be in compliance with state law. Those who collaborate will receive
rewards, those who question the assumptions, or mention local realities are penalized. Additional fines,
penalties, threats, admonitions and lawsuits from the state, as opposed to grants, consistent streams of
affordable housing funding, property tax return, and reforming the broken state of state -local finance, will
only serve to widen the gap in the relationship between state and local government who need to work
together in order to solve this critical problem facing the State.
7) Housing Element Compliance Convenient Target For Larger Housing Issues:
Levying additional fines, penalties, and generating additional lawsuits against local governments over
housing element compliance may give some comfort that the dramatic housing issues facing the state
will suddenly be addressed. This is hardly the case. Housing production is ultimately the result of many
forces in the marketplace and depends heavily on the state of the local economy, land values, lifestyle
choices of citizens, and the private developers who respond to those market signals and produce
products, which stand to generate the maximum profit. Local governments plan for housing, but it is
ultimately the private market responding to the desires of the marketplace, which determine what is built.
Constructing affordable housing in a state with high land values is a difficult task that often cannot be
done unless significant levels of government subsidies are provided. The League and CSAC have
consistently supported a stream of state funding for affordable housing, but over the last ten years the
state has provided little housing funds, outside the one -time boost in last year's budget to address these
needs. Further, the effects of the changes the federal 1986 Tax Reform Act, which removed much of the
private incentive to construct and own rental housing, and contributed to the decline in multifamily
production in this state from 148,000 units in 1986, to 36,000 in 2000, cannot be ignored. Construction
defect litigation surrounding condominium construction has also led to a significant reduction in a form of
housing that proved highly popular in the 1980's. Finally, the concerns of the electorate over open space
and preserving quality of life in many high - growth areas of the state must not be forgotten, given the
over 50 local land use initiatives which were on ballots last November.
Above are the specific issues we have with this legislation. We are not, however, opposed to a
discussion of the full range of issues associated with the housing element. Local elected officials have
many issues themselves with this process which relies heavily on procedure, process, and paperwork, in
addition to the full range of discussions which take place with the citizens in our communities, to whom
we are ultimately held accountable. If your initial desire is to get our attention on this issue, that has
been accomplished. If your intention is to start a comprehensive dialogue with all affected parties - -the
state, local governments, COG's, housing advocates, developers, and others - -over how the housing
element process can be improved, we would welcome that discussion. However, we must OPPOSE this
legislation for all the reasons previously stated.
If you have any questions please feel free to contact Daniel Carrigg at (916) 658 -8222 or DeAnn Baker at
(916) 327 -7500 ext. 509.
Sincerely,
Daniel Carrigg
Legislative Representative
League of California Cities
Counties
DeAnn Baker
Legislative Representative
California State Association of
cc: Members and Consultant, Senate Housing and Community Development Committee
Senator John Burton
Senator Ray Haynes
Senator Dick Monteith
Senator Tom Torlakson
Assembly Member Alan Lowenthal
Assembly Member Pat Wiggins
Julie Bornstein, Director, Department of Housing and Community Development
Mike Gotch, Legislative Secretary, Governor's Office
t3. SB 910 (DUNN) —HOUSING ELEMENTS: FINES, PENALTIES, AND
LAWSUITS — OPPOSE
MOTION BY MAYOR PRO TEM BRUESCH, SECOND BY COUNCILMEMBE
CLARK that the Council oppose SB 910 (Dunn) and authorize the Mayor to send letters of
opposition. Vote resulted:
Yes:
Bruesch, Taylor, Imperial, Clark
No:
None
Absent:
Vasquez
Abstain:
None
The Mayor declared said motion duly carried and so ordered.
C. GOVERNOR'S MEMORANDUM OF UNDERSTANDING WITH SCE
MOTION BY MAYOR PRO TEM BRUESCH, SECOND BY I ..
COUNCILMEMBER CLARK that the Council support the Governor's MOU with SCE and
authorize the Mayor and Council to send letters of support to the State Legislators and Governor.
Before vote could result, more discussion ensued.
Councilman Taylor asked Mr. Tripepi to relate the type of opposition encountered when
trying to find solutions to developing more power.
Frank Tripepi, City Manager, stated that the City of Industry, which has a large industrial
and business base in their community, is in the process of trying to develop a power plant on a
12 -acre site. Mr. Tripepi continued that they are discovering that building a powerl plant is a
difficult process for a municipality. The four big out -of -state generators (Reliant Energy, Enron,
Southern and Duke Power) have pre- purchased, up to 15 years in the future, turbines and other
inventory essential to building a power plant. Mr. Tripepi stated that if a municipality wants to
build a power plant, they will have to form a partnership with one of those companies in order to
get the plant built.
Councilman Taylor remarked that it is amazing how things can be shut down when
someone tries to come up with a solution. Mr. Taylor explained that turbines are only built when
a generation plant is going to be approved. Mr. Taylor asked if SCE can build any more power
plants.
John Steelesmith, SCE, explained that when the proposals from the PUC were presented
for deregulation, SCE recommended having a holding company that the utility will then be an
affiliate of That was to allow the holding company to be unregulated and to be able to build
other power - generating affiliates. Mr. Steelesmith continued that SCE did this with the approval
of all the regulatory procedures in the State and it became Edison Mission Energy. Mr.
Steelesmith stated that the State has been historically strict, and that in the approval process the
State conditioned that Mission Energy could not build a power plant in California. However, an
agreement has since been worked out whereby the State will now allow Mission Energy to come
back into the State and build a power plant in Bakersfield. SCE agreed to buy what was to be a
power plant project, build the plant, and run it at cost with a reasonable return approved by the
State of 11.6 %. Mr. Steelesmith explained that the 11.6% is an extreme contrast compared to
what the out -of -state generators returns are.
Councilman Bruesch stated that the big four generators, in partnership with other
corporations, have 8 to 10 generation plants planned to come on -line within the next two years.
Mr. Bruesch stated that one reason those companies have pre - purchased the turbines is that
foreign manufacturers cannot produce a turbine to meet the air quality standards of California or
the U.S.
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