by Ryan M. Kendall, Sarah G. Reisman, and Cesar Covarrubias
California—and Orange County—is in the midst of an inextricably linked housing and homelessness crisis. Two main causes of the housing crisis are the scarcity of housing stock and the lack of policies that promote balanced housing development across income levels. By 2017, California built 2.3 million fewer homes than it needed to house its population.1 From 2003-2014, California built only 47% of the housing needed statewide.2 This housing under-build is especially severe for low- and middle-income housing, which is dramatically under-built compared to housing for high-income earners—further exacerbating the severity of California’s housing crisis. Basic economic principles teach that when the demand for something outstrips supply, prices increase. Because California does not build enough housing, its residents pay the second-highest share of their incomes on things like rent.3 Orange County residents, in particular, feel the pinch. Orange County is in the top ten least affordable metropolitan areas in the nation and the fifth least affordable metropolitan area in California.4 The average cost of a two-bedroom apartment in Orange County is $2,324,5 a price leaving all but the County’s wealthiest residents housing cost-burdened—many severely cost-burdened.6
High housing costs directly contribute to California’s homelessness crisis—for every $100 increase in the median rent price, the homelessness rate shows an associated increase of 15% in metro areas and 39% in non-metro areas.7 Given this connection, it is unsurprising that homelessness has surged in California. According to the 2022 Annual Homelessness Assessment Report to Congress, there were over 170,000 homeless individuals in California, which is 30% of the nation’s total homeless population.8 In Orange County, there are almost 6,000 homeless people.9
To meet the current housing needs in the county—which will bring down the cost of housing and reduce homelessness—Orange County needs to build 111,996 more units of affordable housing.10 But the county is far from meeting this number of affordable housing units—only four out of thirty-five jurisdictions in Orange County met their housing production goals in the lower-income categories and all cities exceeded their housing production for the higher-income category.11
What Can Local Jurisdictions Do? The State of California has recognized that the solution to the housing crisis lies in our cities and communities, which are best equipped to identify and implement solutions specific to the local needs of those communities. It has passed laws that empower local governments to plan for the housing needs of its residents across all income levels.
Local jurisdictions, including charter cities, are charged with adopting housing plans, known as “housing elements,” for the community. To prepare a housing element, a local jurisdiction analyzes the community’s housing needs and specifies how it plans to meet those needs using zoning and land use laws. While no government can guarantee that every housing project will get funded or each planned-for housing unit will get built, local jurisdictions can use the housing element process to pragmatically assess the community’s housing needs and realistically plan to meet those needs across all income levels. Once a local jurisdiction adopts an approved housing element, the housing element becomes that jurisdiction’s primary land use and planning policy statement.
Short of engaging in bad faith or inadequate planning, local jurisdictions have the power to plan for housing in a way that makes sense for the community—so long as those plans meet the community’s housing needs across all income levels. To help local jurisdictions adopt adequate housing elements, and thereby plan for enough housing across income levels, the state’s primary agency charged with overseeing affordable housing laws, the California Department of Housing and Community Development (HCD), provides millions of dollars in grants to local governments to help in the preparation, adoption, and implementation of their housing elements. HCD has developed toolkits, guidelines, memoranda, reporting tools, and checklists for local jurisdictions to use throughout the housing element process.12 HCD and the state also provide millions of dollars to local governments to fund projects and programs to help in addressing the unmet housing needs of their local communities. In fiscal year 2020-2021, Orange County received over $82 million in awards from the state and federal government to support housing development.13
By partnering with HCD and utilizing available tools, local jurisdictions can ensure they make adequate housing plans for their community and maintain local control of the planning process. But what happens when a jurisdiction fails to plan for enough housing across all income levels?
Local Control: Use It or Lose It By adopting a housing element and meeting the state-law requirements, local jurisdictions ensure they plan for enough housing for all income levels, preserving and expanding affordable housing in their community. But when a locality fails to adopt a compliant housing element or takes an action inconsistent with the housing element, it risks losing local control of its housing development and exposes itself to costly lawsuits and attorney fee awards.
The statutory consequences for failing to plan for adequate housing for all economic levels in the community include:14
If a court finds the jurisdiction did not adopt a compliant housing element, the court must issue an order suspending the jurisdiction’s ability to take various development approval actions or that requires the jurisdiction to approve proposed developments containing affordable housing.
If a local jurisdiction takes an action inconsistent with its compliant housing element, the jurisdiction opens itself up to lawsuits aimed at forcing the jurisdiction back into compliance with state law. These suits can be costly for the local jurisdiction but are avoidable.
Downzoning a site zoned for higher density to lower density, or taking another action resulting in insufficient sites to locate housing for all income levels likewise exposes the jurisdiction to costly, but avoidable lawsuits.
HCD can review a local jurisdiction’s failure to implement a housing element program, and HCD can review any action the jurisdiction takes that contradicts its housing element. HCD can then revoke any prior findings that the local jurisdiction’s housing element complies with state law, and HCD may notify the Attorney General the jurisdiction is in violation of the Housing Element Law. HCD may also refer violations of certain other affordable housing laws identified in its review of the jurisdiction.
The Attorney General may also sue the local jurisdiction to compel compliance with various affordable housing laws.
Orange County jurisdictions provide instructive examples of what happens when a locality fails to adequately plan for housing across all income levels in its community or takes an action inconsistent with its housing element.
Case Study: Huntington Beach’s Non-Compliance With the Housing Element Law In 2013, Huntington Beach adopted a housing element that followed state law. As part of its duty to plan for enough housing across all income levels in the community, Huntington Beach sited most units for its low-income housing share in an area known as the Beach Edinger Corridors Specific Plan (BECSP). At this juncture, Huntington Beach had followed state law. In 2015, Huntington Beach amended the BECSP, significantly reducing the number of housing units that could be developed there and effectively eliminating sites for affordable housing in Huntington Beach. The Kennedy Commission,15 a broad-based coalition of residents and community organizations advocating for affordable housing for low-income families in Orange County, notified Huntington Beach that amending its BECSP violated state law and then sued to compel the city to follow its state law obligations. In 2019, HCD also sued Huntington Beach related to the city’s non-compliance with its housing element.
After years of protracted litigation, Huntington Beach ultimately amended its housing element to follow state law. Because of this litigation, the city provoked a change in state law applying more state affordable housing requirements to California’s charter cities and ended up with a $3.5 million attorney fee award against it.16 Had Huntington Beach exercised local control to make sure it always had a plan in place for enough affordable housing in its housing element, it could have avoided the unnecessary expense of litigation and provided for its residents across all income levels. Yet, Huntington Beach continues to pursue its litigation strategy, filing a federal lawsuit against the State of California over its housing laws and facing a lawsuit from Attorney General Rob Bonta over the city’s housing law intransigence.17
Case Study: The Builder’s Remedy Cities without compliant housing elements are also vulnerable to the so-called Builder’s Remedy, a 1990s-era law strengthened in 2019 as part of the Housing Crisis Act of 2019. The Builder’s Remedy requires local jurisdictions without a compliant housing element to approve any housing project submitted by a developer if at least 20% of the homes are low-income or 100% of the homes are moderate-income. The local jurisdiction cannot disprove of the plan, even if it is not consistent with its zoning or general plan standards.
Several developers have filed Builder’s Remedy applications around the state, including with La Habra in Orange County. Lennar Homes of California has been trying to build a housing project with hundreds of units in La Habra since 2017. The project led to vocal opposition and a new city measure that requires voter approval before open space can be rezoned for residential use. In 2020, La Habra rejected the proposed development and was promptly sued by Lennar. Trial is currently scheduled for May 1, 2023. Lennar recently filed a new plan for a 530-unit development with 110 units of affordable housing. Because La Habra does not have an approved housing element, and because at least 20% of the proposed units are affordable, La Habra might have to approve the development under the Builder’s Remedy.18 If La Habra had a compliant housing element, it could continue to reject this project—and other proposals—that the community feels are inconsistent with its needs.
Conclusion Addressing Orange County’s affordable housing and homelessness crisis will require a regional approach where every local jurisdiction does its part. Each Orange County jurisdiction, including charter cities like Huntington Beach, must join this effort by putting balanced policies into practice that address housing needs across income levels and by eliminating policies that give preference to higher-income housing development. This starts with adopting housing elements that comply with state law and promoting policies that address the real housing needs of our communities—across all income levels.
ENDNOTES
Ryan M. Kendall is a Staff Attorney in the Systemic Impact Unit with Community Legal Aid SoCal (CLA SoCal). Ryan can be reached at rkendall@clsocal.org. Sarah G. Reisman is Directing Attorney of Impact & Advocacy with CLA SoCal. She can be reached at sreisman@clsocal.org. Cesar Covarrubias is Executive Director of The Kennedy Commission, and his email is cesarc@kennedycommission.org.