Newsom’s housing crackdown

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Welcome back to Capitol Confidential!

Dozens of lawmakers have swapped their suit jackets for polos (probably), as their month-long summer recess is well underway. Session adjourned last week on Thursday afternoon, as legislatures decamped for their home districts and summer vacations. 

After a marathon few weeks of bills and budget fracas, we’re turning our attention to one of the state’s biggest policy issues: housing. 

In a gleeful press release from the governor’s office last week, the state applauded its latest legal victory over Huntington Beach’s attempt to skirt housing law requirements. 

“Hey, NIMBY Huntington Beach,” the release is titled. “You tired of losing yet?”

The decision by the Superior Court in San Diego on June 30 is the latest blow to the city’s years-long effort to challenge the state’s housing mandate and its ability to penalize the city for failing to meet those standards. The most recent ruling denies the city’s cross-complaint that accused the state of acting unlawfully by enacting fines and penalties against Huntington Beach, as a result of its previous attempts at denying new housing construction mandates. 

Huntington Beach’s feud with the state began in March 2023 when Attorney General Rob Bonta first sued the beach city for its refusal to adopt a state-mandated housing plan in late 2021. 

That was just one example in the last week of the ways in which errant cities are attempting to skirt housing requirements, as Gov. Gavin Newsom’s administration cracks down on jurisdictions that aren’t building their share of new homes. 

Louis Mirante, senior vice president of public policy at the Bay Area Council, said increased enforcement actions on municipalities not meeting housing mandate laws has ramped up over the past year. 

In a dramatic move last week, California housing officials ruled that the small city south of San Francisco is no longer in compliance with state housing laws. The Chronicle’s J.K. Dineen reported the decision strips Brisbane of its local land-use control and makes it ineligible for certain state funds.

State Housing Accountability Unit Chief Melinda Coy said in a letter to Brisbane officials that the city has repeatedly failed to meet deadlines on its massive Baylands Specific Plan, a 660-acre redevelopment project. It straddles the San Francisco-Brisbane border, and as Dineen reported, accounts for 81% of the 1,588 units the city is required to plan for under state housing element law. It would also help the city meet about 50% of its low-income housing goals.

Brisbane said in a statement it had “invested significant time and resources” into the project but was unable to meet the state’s May deadline, saying the project includes an extraordinarily complex set of requirements, including coordination with the California High-Speed Rail Authority.

Brisbane is, so far, in limited company. Only two other California municipalities have been subject to the same type of punishment: Portola Valley in San Mateo County and Norwalk in Los Angeles County. Other communities, including Half Moon Bay, have been served slightly less severe final warnings by the Department of Housing and Community Development, known as HCD, for similar failures to meet housing element laws. 

These are collectively known as California’s Housing Element Law, a decades-old requirement that all local governments in the state make plans to meet regional housing needs. These are incorporated into cities’ and counties’ general plans, and are due to the state every eight years. 

But over the past few years, Mirante said, new bills pertaining to this broad network of requirements started to give the state more power of enforcement. One of those was SB828, authored by Sen. Scott Wiener, D-San Francisco, and cosponsored by the Bay Area Council. Signed into law by former Gov. Jerry Brown in 2018, it was an ambitious overhaul of one of the processes that determines a municipality’s housing needs, the Regional Housing Needs Allocation, or RHNA (referred to as ree-nah). 

A year prior, in 2017, a wave of bills had strengthened HCD’s enforcement abilities. These include AB72, which gave the housing authority the ability to find a local government out of compliance with its housing element and refer violations to the attorney general. 

Mirante said those housing bills have “dramatically” increased the number of homes local governments had to plan for, and tightened expectations on local governments to deliver them. They’ve also increased the state’s enforcement power, he said. 

“It does reflect that the state is incredibly impatient with local governments in this,” Mirante said.

It remains to be seen how the state will continue to respond should more cities and counties struggle to meet their region’s own housing requirements. 

In the current session, more than a dozen bills are moving through the Capitol pertaining to various housing element requirements and provisions. 

As the Chronicle’s Olivia Borgula reported, recently released data from the state’s Housing and Community Development Department shows that most Bay Area cities are not on pace to permit the number of homes the state says they should by January 2031. The latest city-reported figures, which run through 2025, cover nearly three years of the eight-year housing cycle that began in February 2023.

The region’s largest cities are also running behind, the data show. San Francisco, Oakland and San Jose have each permitted less than one-sixth of the homes they are expected to approve by 2031. San Francisco trails the furthest behind among the three, reaching just 7% of its target by the end of 2025.

While the current eight-year housing element cycle is only a fraction of the way through, with more than four years left, the figures show a steep climb ahead. 

“At this point in the planning cycle, if cities are not already on track to meet their housing goals, they're really going to be hard pressed to turn that around in the next five years,” said David Garcia, deputy director of policy at UC Berkeley’s Terner Center for Housing Innovation.

Speaking of a lack of progress in achieving the state’s goals: The Chronicle’s Joe Garofoli reports that another Wiener law meant to spur new construction isn’t having its desired effect yet. Since SB4 passed three years ago, the “Yes in God’s Backyard” measure, which allows faith-based organizations to bypass many of the requirements to building as long as they’re building 100% affordable housing, hasn’t resulted in a single completed project yet.  

Since the law’s passage, 94 units have been permitted statewide, but none has been completed, according to the California Department of Housing and Community Development.  

Soon after 14 ballot measures were locked in for California’s November election, the author of one of the propositions, Proposition 43, made an unusual declaration: She hopes no one votes for it.

Assembly Member Buffy Wicks, D-Oakland, said on X last week that she wrote the measure “not because I wanted it to become law. But because it was the only path left to get the more dangerous initiative off the ballot before time ran out.”

Wicks’ ACA22 is the kind of legislative compromise that has come to typify the ballot measure deadline process in recent years, using the Legislature’s ability to place measures on the ballot as a potential bargaining tool. Her plea for voters to reject the plan she created underscores the slapdash nature of the process at times — Wicks now says the eleventh-hour deal is better than nothing, but doesn’t actually want it to succeed.

The compromise offered a slimmed-down version of the original measure Wicks sought to avoid. It sidesteps any caps on real estate transfer taxes originally proposed by the Taxpayer’s Protection Act, and nixes a retroactive cancellation of voter-approved tax measures. But it still proposes that any new local taxes earmarked for specific purposes, such as housing or transportations, pass with a two-thirds vote, rather than a simple majority.

Read more about Proposition 43, and the convoluted negotiations that led to it, here.