What are SB 167 and AB 678?

 

SB 167 is a proposed state law designed to strengthen the Housing Accountability Act (HAA) by making it easier to enforce. Passed in 1982, the HAA is a little-used law that prevents cities from denying zoning and general plan compliant proposed housing development projects, or conditioning their approval based on lower density, unless cities make findings that the proposed housing development would have specific adverse impacts on human health or safety.

AB 678 is the Assembly companion bill to the Senate’s SB 167. State Senator Nancy Skinner authored SB 167 and Assemblymember Raul Bocanegra authored AB 678. While the bills were introduced with identical language, they may differ as the bills move through their respective houses. This FAQ refers to SB 167 since it will be heard in committee before AB 678.

SB 167: https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180SB167

AB 678: https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201720180AB678

 

 

What are “evidentiary standards” and why does SB 167 change the standard to “clear and convincing”?

Under current law, when local agencies deny a zoning and general plan compliant proposed housing development, or condition approval based on reduced density, they must make specific findings that the proposed housing development would have a negative impact on human health or safety. Evidentiary standards under the HAA determine how much evidence localities must provide to substantiate their findings. The current evidentiary standard is “substantial evidence,” which courts have determined to mean “more than a mere scintilla.” In other words, “substantial” under the law doesn’t mean “substantial” in ordinary English language use. Almost any rationale submitted by a locality is accepted under the current evidentiary standard, which permits localities to thwart the intent of the HAA by making unsubstantiated findings. Courts interpret the “clear and convincing” evidentiary standard to mean “substantially more likely than not to be true.” By elevating the evidentiary standard to “clear and convincing,” localities will need to prove that denying proposed housing developments or conditioning their approval upon lower density, is necessary to safeguard human health or safety.

 

Can cities change their zoning rules after a developer submits an application to evade the HAA?

No. Some cities have tried changing their zoning laws after a developer proposes to build housing to circumvent the HAA. While the HAA strongly implies that such actions are not permissible, SB 167 clarifies that zoning or general plan land use changes made after the date the application for a housing development was deemed complete do not constitute a valid basis to disapprove or condition the housing development project.

 

How do fines for noncompliance with the HAA work under SB 167?

SB 167 assess fines for noncompliance w/ the HAA starting at $100,000 per housing unit, to be placed in a housing trust fund. The court may assess additional fees based on attainment of RHNA targets. Localities have 5 years to place the funds in a housing trust fund, which may only be used to fund new-construction housing affordable to low-income people.

 

Why are fines necessary?

When individuals break the law, they are fined or imprisoned. When businesses break the law, they are fined, and may lose licenses necessary to operate. Yet when municipalities break state housing law, they suffer no repercussions. Localities have been violating the HAA for 35 years with impunity. In order to deter noncompliance with the HAA, SB 167 imposes fines.

 

What are “bad faith” actions?

In certain egregious cases, localities do not comply with court orders or agreed-upon settlements, or deny proposed housing developments frivolously or entirely without merit. In these instances, a court may award punitive damages to the petitioner.

 

How are attorney’s fees determined under SB 167?

Current law requires localities that violated the HAA to reimburse nonprofit housing developers for reasonable attorney’s fees. SB 167 expands the attorney’s fees provision to all petitioners. Small nonprofit housing organizations cannot afford to repeatedly file litigation against localities that violate state law without receiving reimbursement for attorney’s fees. Even with legislative direction and increased funding to the Attorney General’s office, the AG cannot monitor and enforce compliance among the 500+ municipalities and counties in California. Decentralized nonprofit enforcement is vital to securing legislatively mandated state housing goals. Furthermore, many small developers cannot afford to spend in excess of hundreds of thousands of dollars to enforce their rights, unless they are reimbursed if successful in court.

 

What is an “HAA analysis” and why does SB 167 require one?

Despite passing in 1982, many localities are unaware of their responsibilities under the HAA. Staff reports for proposed housing development already assess compliance with local zoning rules and the general plan. SB 167 requires localities to conduct an “HAA analysis,” which means staff reports must determine if the HAA applies to the proposed housing development. Such a determination requires little additional work, but will better inform decision makers of their legal responsibilities.

 

Does SB 167 permit housing development “by-right”?

No, SB 167 is not a “by-right” bill, since granting permits for zoning and general plan compliant proposed housing development projects remains discretionary. SB 167 works by making the existing HAA more enforceable, but local governments still retain discretionary approval authority.

 

Does SB 167 limit CEQA litigation?

No, since the bill does not make housing permits “by-right” or ministerial, SB 167 does not impact the ability of anyone to file a CEQA challenge to proposed housing developments. CEQA permits challenges to projects when a government agency makes a discretionary decision.

 

Does SB 167 limit a city’s authority to mandate inclusionary zoning?

No, SB 167 does not impact inclusionary zoning requirements. An early draft of SB 167 included an infeasibility provision, which some affordable housing advocates thought could imperil inclusionary zoning programs. While the authors of SB 167 never intended it to limit IZ policies, they removed the provision to ally concerns from numerous stakeholders. Please see the “infeasible test” section below.

 

Does SB 167 limit local control over land use decisions?

SB 167 does not challenge local zoning authority. Local governments retain the ability to determine their own land use scheme, given the limitations of other housing laws, including Housing Element Law. The HAA requires local governments to follow their own land use rules; it does not permit the state to determine local land use rules.

 

 

Explanation of changes in SB 167 due to stakeholder feedback:

Infeasible test – Based on feedback from the Western Center on Law and Poverty, the California Rural Legal Assistance Foundation, American Planning Association – California, and the California State Association of Counties, the authors removed the “infeasible” test, which defined infeasible as “A housing development project is rendered “infeasible” if, inter alia, the applicant’s ability to earn an economic rate of return comparable to that of other projects that are similar to the proposed housing development project is diminished.” The intent of the infeasible test was to prevent project-specific impositions that would render new housing development economically unviable, but the authors recognized that the test would be difficult to implement and could entail negative unintended consequences. Instead, SB 167 retains the current law definition of feasible as “capable of being accomplished in a successful manner within a reasonable period of time, taking into account economic, environmental, social, and technological factors.”

Stakeholders also expressed concern that the infeasible test could prevent localities from imposing necessary development fees, including fees for infrastructure, schools, parks, CEQA mitigation, and the like, as well as limit inclusionary zoning programs. The authors understand that local governments must assess fees on new housing construction to fund needed public services and do not intend to complicate that effort.

HAA petitions before a final determination is made – SB 167 originally granted trial courts the authority to hear HAA cases before a final determination is made about the proposed housing development at the court’s discretion. The intention was to give petitioners an effective court remedy in extraordinary cases where local agencies attempted to circumvent the HAA by refusing to make a final determination. There are recognized exceptions to the exhaustion doctrine, including cases where the administrative remedy is inadequate, where it would be futile to pursue an administrative remedy, or when an agency indulges in unreasonable delay. APA California was concerned that such a provision could complicate CEQA compliance, prevent trial courts from reviewing all of the facts, and that permitting delays are better addressed in the Permit Streamlining Act. Given these concerns, the authors excised this new authority from SB 167.

“Above-moderate” income housing – Based on stakeholder feedback, the authors removed the addition of “above-moderate” income housing developments in subdivision (d), which only applies to below-market rate housing. The Western Center for Law and Poverty sponsored the addition subdivision (d) in a 1991 amendment to the HAA. The authors recognize that the Western Center carefully constructed subdivision (d), so additional protections for market-rate housing are included in other subdivisions of SB 167. The legislature rightly recognizes that below-market rate housing faces special obstacles to gain local approval. Given the severity of California’s housing crisis and the history and practice of local agencies violating the HAA for above-moderate income housing projects, market-rate housing also needs some additional protections.

Expanding definition of “disapprove” – SB 167 originally permitted petitioners to file an HAA petition if a local agency, “Approves another project that is proposed for the same land as a housing development project and the other project contains fewer residential units for very low, low-, moderate-, or above moderate-income households.” The intent of this provision was to prevent local agencies from coercing developers to reduce the density of their project by proposing a project alternative, without ever formally disapproving the original proposal. The Western Center noted that such a provision could complicate project negotiations, and might even imperil revised proposals that better meet community needs. Due to this unintended consequence, the authors removed the provision. Likewise, the current draft of SB 167 does not contain the expanded ability of “housing organizations” to file petitions for anything other than a project disapproval.