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Facing RHNA: Tri-Valley local officials discuss next housing elements

With lack of funding, many worry about where money will come from to build much-needed affordable units

There seems to be no question in state officials' minds whether California's housing shortfall has gotten any better over recent years.

According to data from the Construction Industry Research Board, which publishes residential and commercial building permit statistics from all 539 California jurisdictions, the state is projected to have permitted a total of about 452,000 homes in the last four years.

Gov. Gavin Newsom's goals back then when he first took office was to develop 3.5 million new housing units by 2025.

With Pleasanton and the other Tri-Valley municipalities gearing up to solidify their sixth Housing Element, along with the rest of the Bay Area, residents could see zoning plans to accommodate up to 441,000 new housing units throughout the entire Bay. During the last cycle in 2014, the Bay Area's allocation of housing units was 187,990.

Pleasanton alone is planning on allocating space to accommodate up to 5,965 new units over the next eight years.

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But how much control do these cities have over building these new units, where will funding come from and just how feasible will it be to actually build all those units -- especially affordable units -- in the Tri-Valley?

"No one can deny the city has been set up to fail when you understand that we've been given these insurmountable numbers with absolutely no funding," Pleasanton Councilmember Julie Testa told the Weekly in an interview. "I mean $500 million for the entire frickin' state, when Pleasanton alone needs between $1.5 billion to $3 billion to build our affordable housing mandates alone ... There's no way (it's happening)."

City staff from all the Tri-Valley municipalities have spent more than a year and a half planning, conducting outreach and analyzing different impact areas in order to draft their 2023-31 Housing Element.

This plan is something that cities execute every eight years (or five in the case of other cities that opt to do so) to meet housing needs that are outlined in the state-mandated Regional Housing Needs Allocation.

The allocation of housing through the use of RHNA has been around since 1969 but over the years, it's become more of a regional planning process as opposed to just one municipality at a time.

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During the last cycle the push to build more housing was there, but the numbers compared to this cycle very much shook a lot of city planners across the state. Even though many of them said they were expecting a larger number of units being asked by the state, they still were taken back by the numbers.

"I think that everybody expected a higher number," David Crompton, chief of planning for the town of Danville, during a RHNA panel webinar hosted by Pleasanton Weekly publisher Gina Channell Wilcox on Dec. 15. "In our last eight-year cycle ... we had a RHNA of about 550 units, which we accommodated. In this round, we had a RHNA of 2,241. So we quadrupled our RHNA."

"I think we were probably expecting maybe double ... but we got quadruple, not just doubled so, it was a bit of a surprise," Crompton added.

Danville, along with Pleasanton, Dublin and San Ramon, each tried to appeal their respective RHNA allocation numbers for several reasons. The city of Livermore didn't appeal because they expected the high number and have enough sites to provide the space, said Eric Uranga, Livermore assistant community development director.

Some of the reasons the other cities appealed included not enough job opportunities will be available near these proposed housing development sites and that because of that, these potential future residents would have to commute to work, thus increasing more carbon emissions.

"We had concerns about the patterns of housing distribution, that it did not seem to really achieve some of the goals that are part of those regional plans, like putting housing where the largest amount of job production is, which has been over the last 10 years overwhelmingly in the South Bay," said Ellen Clark, Pleasanton's community development director.

"We felt that those allocations didn't really reflect that planning goal," she added. "It didn't address the greenhouse gas emissions targets that the state and the region are looking to accomplish and that didn't properly take account for some of the constraints that we see in our jurisdictions around things like transit availability."

That lack of mass transit is another one of the reasons San Ramon senior planner Cindy Yee said the city appealed its RHNA allocations and said the 5,111 units the city must now plan for will only increase commute times.

So now as the Tri-Valley cities get ready to approve and send their final Housing Element drafts to the Department of Housing and Community Development (HCD), which is the official entity that takes care of reviewing and approving these plans, the next question is where the funding to build these housing units will come from.

And that is what Testa said is the issue -- specifically when it comes to funding the affordable housing units that are included in the housing elements.

File photo shows rows and rows of apartment buildings and other housing constructed in Dublin in recent years.

"That's the big problem in a lot of communities, especially Danville, that we have experience with building a project at 40 units an acre, but they're anything but affordable, even at that density," Crompton said. "So unless you have some nonprofit or you have some funding to buy down the cost of land and construction, they're not gonna be affordable."

Testa doubled down on that and said that cities have been set up to fail because the state has not provided enough funding and quadrupled the amount of housing in several cities.

"Market rate can get built, the market drives it," Testa said. "If people are gonna buy it, developers gonna build it. Affordable can not get built without the billions of dollars of subsidy. No developer will build an affordable project."

According to the California Legislative Analyst's Office website the 2022-23 state budget provided HCD with $100 million annually in state housing tax credits as well as an additional $500 million one time for tax credits to builders of rental housing and affordable to low-income households.

But as Testa had previously said, it is not enough.

"We're luckier than most," Testa said regarding Pleasanton. "We have $12 million in our affordable housing fund ... (still) that will leverage, if we're lucky, 80 units."

She also said another way that cities have been set up to fail by the state is by increasing the penalties for not complying with the RHNA mandates.

She said that with things like the Housing Accountability Unit, which was formed in the 2021-22 budget cycle, cities are being forced to give away their local control.

According to a spokesperson from the HCD, not having a compliant Housing Element by the Jan. 31 deadline could lead to cities being ineligible in receiving state funds that can go toward infrastructure, transportation, housing and other state programs.

They said there are also financial and legal ramifications that include notifying the California Office of the Attorney General, which may bring suit for violations of State Housing Element Law.

"Statute also provides for court-imposed penalties for persistent noncompliance, including financial penalties -- a minimum fine of $10,000 per month and up to $100,000 per month," the spokesperson said. "A court can multiply penalties up to a factor of six if the jurisdiction continues to remain noncompliant."

Testa said that the main difference from this cycle to the fifth cycle was that there weren't any consequences for not meeting the target affordable housing units -- only for the market units, which she said Pleasanton did very well in meeting those numbers.

"The thing is in the fifth cycle Pleasanton met 300%, so like way above our requirement for market rates," she said. "The point is that almost (no city) could achieve affordable housing because of the funding."

However, the HCD spokesperson did make a point to mention that while cities must adopt their plans by the deadline, that doesn't mean that they are being forced to build all those units right away.

"Cities and counties are required to adequately plan to meet the housing needs of everyone in the community," according to HCD. "Local jurisdictions are not required to produce a certain number of units. Rather, each jurisdiction must submit (by April 1 of each year) an annual progress report on the jurisdiction’s status and progress in implementing its housing element. Among other things, this includes the number of units entitled, permitted, and completed at each income level."

"No one can deny the city has been set up to fail when you understand that we've been given these insurmountable numbers with absolutely no funding."

-Julie Testa, Pleasanton City Council member

But with the consequences being what they are across the board for both market and affordable housing units, Testa said that once cities adopt their housing elements, they must ban together and fight back against the state through a joint lawsuit.

She said the point of the lawsuit isn't to reduce the number of units, but rather to roll back on the consequences of not meeting the target goals, which she again stated are unachievable due to the lack of funding for affordable housing.

"If the state comes up with funding so that cities can actually build affordable housing, then there might actually be some progress on getting affordability built," Testa said. "Right now, it's all set up so that when we fail, then the market rate builders have streamlining ministerial."

Streamlined ministerial approvals is something that was enacted through Senate Bill 35, which basically says that jurisdictions that are not on track to meet their housing production goals would have to relinquish any land that meets zoning requirements to developers.

That means any objective design standards such as building height codes can be waived by the developers and the city would have no say in how these buildings would be built, which is something that both Testa and all of the different city planners want to avoid.

"Instead of us trying to find a way to fit the housing into our community, the best that we can, because we know our communities, the state can come in and tell you where to put the housing and what the density should be," Crompton said. "In the end, you're going to end up with the housing and so the best we can do is try to do it our way."

To watch the full RHNA panel discussion on the history of RHNA, how the cities developed their Housing Elements and the consequences of not complying with the allocation mandate click here.

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Christian Trujano
 
Christian Trujano, a Bay Area native and San Jose State alum, joined Embarcadero Media in May 2022 following his graduation. He is an award-winning student journalist who has covered stories in San Jose ranging from crime to higher education. Read more >>

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Facing RHNA: Tri-Valley local officials discuss next housing elements

With lack of funding, many worry about where money will come from to build much-needed affordable units

by / Danville San Ramon

Uploaded: Mon, Jan 2, 2023, 12:56 pm

There seems to be no question in state officials' minds whether California's housing shortfall has gotten any better over recent years.

According to data from the Construction Industry Research Board, which publishes residential and commercial building permit statistics from all 539 California jurisdictions, the state is projected to have permitted a total of about 452,000 homes in the last four years.

Gov. Gavin Newsom's goals back then when he first took office was to develop 3.5 million new housing units by 2025.

With Pleasanton and the other Tri-Valley municipalities gearing up to solidify their sixth Housing Element, along with the rest of the Bay Area, residents could see zoning plans to accommodate up to 441,000 new housing units throughout the entire Bay. During the last cycle in 2014, the Bay Area's allocation of housing units was 187,990.

Pleasanton alone is planning on allocating space to accommodate up to 5,965 new units over the next eight years.

But how much control do these cities have over building these new units, where will funding come from and just how feasible will it be to actually build all those units -- especially affordable units -- in the Tri-Valley?

"No one can deny the city has been set up to fail when you understand that we've been given these insurmountable numbers with absolutely no funding," Pleasanton Councilmember Julie Testa told the Weekly in an interview. "I mean $500 million for the entire frickin' state, when Pleasanton alone needs between $1.5 billion to $3 billion to build our affordable housing mandates alone ... There's no way (it's happening)."

City staff from all the Tri-Valley municipalities have spent more than a year and a half planning, conducting outreach and analyzing different impact areas in order to draft their 2023-31 Housing Element.

This plan is something that cities execute every eight years (or five in the case of other cities that opt to do so) to meet housing needs that are outlined in the state-mandated Regional Housing Needs Allocation.

The allocation of housing through the use of RHNA has been around since 1969 but over the years, it's become more of a regional planning process as opposed to just one municipality at a time.

During the last cycle the push to build more housing was there, but the numbers compared to this cycle very much shook a lot of city planners across the state. Even though many of them said they were expecting a larger number of units being asked by the state, they still were taken back by the numbers.

"I think that everybody expected a higher number," David Crompton, chief of planning for the town of Danville, during a RHNA panel webinar hosted by Pleasanton Weekly publisher Gina Channell Wilcox on Dec. 15. "In our last eight-year cycle ... we had a RHNA of about 550 units, which we accommodated. In this round, we had a RHNA of 2,241. So we quadrupled our RHNA."

"I think we were probably expecting maybe double ... but we got quadruple, not just doubled so, it was a bit of a surprise," Crompton added.

Danville, along with Pleasanton, Dublin and San Ramon, each tried to appeal their respective RHNA allocation numbers for several reasons. The city of Livermore didn't appeal because they expected the high number and have enough sites to provide the space, said Eric Uranga, Livermore assistant community development director.

Some of the reasons the other cities appealed included not enough job opportunities will be available near these proposed housing development sites and that because of that, these potential future residents would have to commute to work, thus increasing more carbon emissions.

"We had concerns about the patterns of housing distribution, that it did not seem to really achieve some of the goals that are part of those regional plans, like putting housing where the largest amount of job production is, which has been over the last 10 years overwhelmingly in the South Bay," said Ellen Clark, Pleasanton's community development director.

"We felt that those allocations didn't really reflect that planning goal," she added. "It didn't address the greenhouse gas emissions targets that the state and the region are looking to accomplish and that didn't properly take account for some of the constraints that we see in our jurisdictions around things like transit availability."

That lack of mass transit is another one of the reasons San Ramon senior planner Cindy Yee said the city appealed its RHNA allocations and said the 5,111 units the city must now plan for will only increase commute times.

So now as the Tri-Valley cities get ready to approve and send their final Housing Element drafts to the Department of Housing and Community Development (HCD), which is the official entity that takes care of reviewing and approving these plans, the next question is where the funding to build these housing units will come from.

And that is what Testa said is the issue -- specifically when it comes to funding the affordable housing units that are included in the housing elements.

"That's the big problem in a lot of communities, especially Danville, that we have experience with building a project at 40 units an acre, but they're anything but affordable, even at that density," Crompton said. "So unless you have some nonprofit or you have some funding to buy down the cost of land and construction, they're not gonna be affordable."

Testa doubled down on that and said that cities have been set up to fail because the state has not provided enough funding and quadrupled the amount of housing in several cities.

"Market rate can get built, the market drives it," Testa said. "If people are gonna buy it, developers gonna build it. Affordable can not get built without the billions of dollars of subsidy. No developer will build an affordable project."

According to the California Legislative Analyst's Office website the 2022-23 state budget provided HCD with $100 million annually in state housing tax credits as well as an additional $500 million one time for tax credits to builders of rental housing and affordable to low-income households.

But as Testa had previously said, it is not enough.

"We're luckier than most," Testa said regarding Pleasanton. "We have $12 million in our affordable housing fund ... (still) that will leverage, if we're lucky, 80 units."

She also said another way that cities have been set up to fail by the state is by increasing the penalties for not complying with the RHNA mandates.

She said that with things like the Housing Accountability Unit, which was formed in the 2021-22 budget cycle, cities are being forced to give away their local control.

According to a spokesperson from the HCD, not having a compliant Housing Element by the Jan. 31 deadline could lead to cities being ineligible in receiving state funds that can go toward infrastructure, transportation, housing and other state programs.

They said there are also financial and legal ramifications that include notifying the California Office of the Attorney General, which may bring suit for violations of State Housing Element Law.

"Statute also provides for court-imposed penalties for persistent noncompliance, including financial penalties -- a minimum fine of $10,000 per month and up to $100,000 per month," the spokesperson said. "A court can multiply penalties up to a factor of six if the jurisdiction continues to remain noncompliant."

Testa said that the main difference from this cycle to the fifth cycle was that there weren't any consequences for not meeting the target affordable housing units -- only for the market units, which she said Pleasanton did very well in meeting those numbers.

"The thing is in the fifth cycle Pleasanton met 300%, so like way above our requirement for market rates," she said. "The point is that almost (no city) could achieve affordable housing because of the funding."

However, the HCD spokesperson did make a point to mention that while cities must adopt their plans by the deadline, that doesn't mean that they are being forced to build all those units right away.

"Cities and counties are required to adequately plan to meet the housing needs of everyone in the community," according to HCD. "Local jurisdictions are not required to produce a certain number of units. Rather, each jurisdiction must submit (by April 1 of each year) an annual progress report on the jurisdiction’s status and progress in implementing its housing element. Among other things, this includes the number of units entitled, permitted, and completed at each income level."

But with the consequences being what they are across the board for both market and affordable housing units, Testa said that once cities adopt their housing elements, they must ban together and fight back against the state through a joint lawsuit.

She said the point of the lawsuit isn't to reduce the number of units, but rather to roll back on the consequences of not meeting the target goals, which she again stated are unachievable due to the lack of funding for affordable housing.

"If the state comes up with funding so that cities can actually build affordable housing, then there might actually be some progress on getting affordability built," Testa said. "Right now, it's all set up so that when we fail, then the market rate builders have streamlining ministerial."

Streamlined ministerial approvals is something that was enacted through Senate Bill 35, which basically says that jurisdictions that are not on track to meet their housing production goals would have to relinquish any land that meets zoning requirements to developers.

That means any objective design standards such as building height codes can be waived by the developers and the city would have no say in how these buildings would be built, which is something that both Testa and all of the different city planners want to avoid.

"Instead of us trying to find a way to fit the housing into our community, the best that we can, because we know our communities, the state can come in and tell you where to put the housing and what the density should be," Crompton said. "In the end, you're going to end up with the housing and so the best we can do is try to do it our way."

To watch the full RHNA panel discussion on the history of RHNA, how the cities developed their Housing Elements and the consequences of not complying with the allocation mandate click here.

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