California Governor Signs into Law Major Reforms to Housing Accountability Act

HIGHLIGHTS:

• California Gov. Jerry Brown has signed into law two bills that significantly reform California's Housing Accountability Act (HAA).
• Effective Jan. 1, 2018, these laws will significantly increase the ability of housing developers and housing advocates to secure the approval of much-needed housing projects throughout the state.
• Although anti-housing jurisdictions still have "wiggle room" to try to avoid their legal obligations to help meet the state's housing crisis, the reformed HAA provides project proponents and housing advocates with significantly greater ammunition to promote housing development throughout California.

California Gov. Jerry Brown on Sept. 29, 2017, signed into law two bills – SB 167/AB 678 (Sen. Nancy Skinner/Assembly Member Raul Bocanegra) and AB 1515 (Assembly Member Tom Daly) – that significantly reform California's Housing Accountability Act (HAA or Act), Cal. Gov. Code §65589.5. These reforms are among the most important of several housing bills signed by the Governor that the California State Legislature enacted in the closing days of the 2017 session. Effective Jan. 1, 2018, these laws will significantly increase the ability of housing developers and housing advocates to secure the approval of much-needed housing projects throughout the state.

Background on the Housing Accountability Act

The California Legislature has found and declared that a lack of housing "is a critical problem that threatens the economic, environmental, and social quality of life in California," and that "[t]he excessive cost of the state's housing supply is partially caused by activities and policies of many local governments that limit the approval of housing, increase the cost of land for housing, and require that high fees and exactions be paid by producers of housing."¹ The Legislature first attempted to combat this trend 35 years ago, in 1982, by enacting the Housing Accountability Act. The Act protects both of the following types of housing development projects:

• Developments that comply with all "applicable, objective general plan, zoning, and subdivision standards and criteria." Local governments may not disapprove – or even reduce the size of – these types of projects unless they find that the project would have an unavoidable impact on public health or safety that cannot be mitigated in any way other than rejecting the project or reducing its size.
• Developments that contain a minimum amount of affordable housing (either 20 percent of units for lower-income households or 100 percent of units for moderate-income), even if the projects do not comply with all objective standards. Local governments may not disapprove or reduce the size of qualifying affordable housing projects except under specific circumstances defined in the statute.²

A very broad range of plaintiffs can sue to enforce the HAA.³ Holland & Knight's West Coast Land Use and Environmental Group has assisted several clients in invoking the HAA to secure approvals for important housing projects. However, as the Legislature has now recognized, the "Legislature's intent in enacting [the HAA] ... in 1982 and in expanding its provisions since then was to significantly increase the approval and construction of new housing for all economic segments of California's communities by meaningfully and effectively curbing the capability of local governments to deny, reduce the density for, or render infeasible housing development projects and emergency shelters."⁴ Since it is clear that "[t]hat intent has not been fulfilled," the Legislature has now acted to strengthen the Act's requirements.⁵

2018 Reforms to the Housing Accountability Act

The following are highlights of the reforms to the Housing Accountability Act, effective Jan. 1, 2018:

• Tightening the Definition of "Objective Standards." Some anti-housing jurisdictions have attempted to avoid the Act by making exaggerated claims that a project does not comply with the jurisdiction's "objective" standards and criteria. The reformed HAA establishes a standard that is very favorable to housing developers and advocates: A project must be considered consistent with objective standards as long as "there is substantial evidence that would allow a reasonable person to conclude" that a project complies.⁶ If a local government determines that a project does not comply with the jurisdiction's objective standards, it must inform applicants of the basis for this conclusion on a specific timeline, and if the local government fails to do so, the project is legally deemed to be consistent. The new law also clarifies that a project's eligibility for a bonus under California's Density Bonus Law does not render it inconsistent with the local jurisdiction's objective standards.
• Increasing the Burden on Jurisdictions that Reject Housing. Any local government that disapproves or reduces the size of a housing development project must now meet the more demanding "preponderance of the evidence" standard – rather than the more deferential "substantial evidence" standard – in proving that it had a permissible basis under the Act to reject the project or reduce its density.
• Increased Availability of Attorney's Fees. The Fifth District Court of Appeal had previously interpreted the Act to authorize an award of plaintiff's attorney's fees only when a local government rejects an affordable housing project.⁷ The revised act overrules this interpretation, making attorney's fees available – and presumptively required – regardless of whether the project contains affordable housing.
• Increased Fines and Increased Authority for Court to Order Projects to Be Approved. The Act previously limited the circumstances under which a court could issue fines or directly order a local government to approve a project. Under the revised Act, after a successful court challenge, a court must issue an order compelling compliance with the Act, and any local government that fails to comply with such order within 60 days must be fined a minimum of $10,000 per housing unit and also may be ordered directly to approve the project. If a local jurisdiction acted in bad faith when rejecting the housing development, the applicable fines must be multiplied by five. If a local government acted in bad faith, a court may also directly order the jurisdiction to approve the project rather than merely order it to comply with the Act.
• Jurisdictions Can Apply Only Those Standards in Effect at the Time the Application Is Complete. Some jurisdictions have attempted to adopt new objective standards for the purpose of avoiding the Act. The revised act clarifies that, for affordable housing projects as well as market-rate projects, changes to the change to the zoning ordinance or general plan made subsequent to the date the application was deemed complete are not a valid basis to disapprove a project.
• Increased Eligibility for Mixed-Use Projects. The Act previously permitted a limited set of mixed-use projects to qualify for the Act's protections. Under the revised HAA, a mixed-use project qualifies as long as at least two-thirds of its square footage is designated for residential use.

Although anti-housing jurisdictions still have "wiggle room" to try to avoid their legal obligations to help meet the state's housing crisis, the reformed HAA provides project proponents and housing advocates with significantly greater ammunition to promote housing development throughout California. For more information or to find out whether the revised Housing Accountability Act could help your project, please contact Holland & Knight's West Coast Land Use and Environmental Group.

Notes

¹ Gov. Code §65589.5(a).

² Local governments may reject or reduce the size of affordable housing development projects only if: 1) the jurisdiction has an approved Housing Element and has met or exceeded its share of its Regional Housing Need Allocation, 2) the project would cause an unavoidable impact on public health or safety that cannot be mitigated in any way other than rejecting the project or reducing its size, 3) rejecting the project is necessary to comply with federal or state law, 4) the area is zoned for agriculture or resource preservation, and there are not adequate water or wastewater facilities to serve the project, or 5) the project is inconsistent with both the jurisdiction's zoning ordinance and general plan land use designation, and other specific criteria also apply. Gov. Code §65589.5(d).

³ Gov. Code §65589.5(k)(1)(A) ("The applicant, a person who would be eligible to apply for residency in the development or emergency shelter, or a housing organization may bring an action to enforce this section.")

⁴ Gov. Code §65589.5(a)(2)(K).

⁵ Id.

⁶ Gov. Code §65589.5(f)(1)(4).

⁷ Honchariw v. County of Stanislaus, 218 Cal.App.4th 1019, 1037 (2013).

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.