Last week, the Governor signed the housing “trailer bill” as part of the 2019-2020 budget. Significantly, the $1.7 billion package (AB 101) passed the Assembly and the Senate unanimously, signaling strong bipartisan support for a “carrots and sticks” solution to the state’s housing crisis. For CALCOG members, a small part of this package that stands out is the $250 million dollars for local planning, half of which will be programmed through regional councils of governments (COGs). It’s hard to describe how significant this allocation is for regions. The Regional Housing Needs Assessment (RHNA) process has always been an unfunded mandate, requiring regions to cobble together a patchwork budget to allocate housing responsibilities with no corresponding incentives. The thought of being able to pair planning resources with a RHNA allocation has–until now–seemed an unattainable ideal.
Here is our first-cut take of how the regional councils of governments may take advantage of these funds and improve the environment for housing production throughout each region of the state:
- Funding for a Key Element of State Housing Policy (Finally). We commend the Governor and the Legislature for recognizing that the RHNA has been an important, but unfunded piece, of the state housing puzzle. Last year, AB 1771 (Bloom) and SB 828 (Weiner) added more definition to the process. We anticipate COGs to use some of the new planning funds to update and improve their Sixth Cycle RHNA methodologies to account for these new responsibilities.
- Fiscal Nerd Note: In case you were wondering, the Byzantine reasoning why the RHNA process is not a reimbursable state mandate can be found in this 2004 decision by the Commission on State Mandates.
- Sub-allocation Programs Will Reconcile State Housing & Climate Goals. An ongoing challenge for regional planners is finding a way to simultaneously achieve aggressive housing (3.5 million new units!) and GHG emission reduction goals (19 percent!). Even with all the new laws that seek to encourage infill, it’s still easier to build on greenfields than along transit corridors. Look for COGs to use some of these funds for competitive grant programs for cities and counties to encourage more development in areas that will encourage alternatives to the automobile (or at least shorter car trips).
- Technical Assistance Will Help Small Communities Comply With New Housing Laws. Another problem that may be addressed with these funds is that many smaller communities (often with a lot of developable land) do not have a housing specialist or even a planner on staff. Their needs in this area are often contracted out to consultants on an ad hoc basis. But a COG can retain experts and make them available to several agencies at once—saving time, money, and the hassles of procurement. This is one of the essential functions of COGs: to offer programs and a framework that allow their member cities and counties to take advantage of the economies of scale.
- Creating More “ProHousing” Communities. One of the most powerful parts of the Governor’s bill may be the provision that authorizes HCD to identify communities as “Prohousing.” To earn the “Prohousing” label, a local agency must adopt a combination of policies listed in the accompanying box. Those communities will then get preference in funding programs like Affordable Housing Sustainable Communities, Transformative Climate Communities, and Infill Infrastructure Grants. Other state agencies (e.g., like California State Transportation Agency and California Transportation Commission) are also encouraged to provide priority points. We think that a great use of the planning funds would be to help cities and counties gain the “Prohousing” status to assure that they will be competitive for additional state funding programs.
- New Workgroups for Regional Cooperation. A unique feature introduced by the Governor is the creation of two mega-regional “workgroups” in the San Joaquin Valley and the Central Coast. This framework reflects the Governor’s acknowledgement that state programs can be shaped to address the real-world conditions in each region. The most effective strategy will differ between Visalia, Riverside, Long Beach, and Santa Clara. The workgroup structure affords flexibility at a regional scale. To address the increased work associated with this cooperation, the bill awards these two workgroups with an additional $8 million in funds that are not available to other regions. #Refreshing.
- Taking a Bite Out of the New Fines for Noncompliance. Some of the biggest news in the Housing Package is that a local agency could be fined for non-compliance up to $100,000 a month, which could grow to $600,000 per month, and finally result in a city’s housing policy being placed in the hands of a receiver (think failing school district) for substantial noncompliance. That’s a good headline. But in all fairness, it would take a lot of determination from a local community to get there. There are a lot of off ramps (initial consultation with HCD, a written finding of noncompliance, an opportunity to challenge the determination in court) before the first fine can be imposed (which can range from $10,000 to $100,000 per month). Plus, the court must consider any mitigating circumstances (e.g., like water availability). But even here, the regional planning funds can be used to fund programs (and leverage the local planning dollars each community will be getting) to bring agencies into compliance before the discussion of noncompliance even begins.
- Finally, Look for Innovation. We all know that the upcoming Sixth Cycle of the Regional Housing Needs Assessment is going to be larger than before. As much as 50% larger than the fifth round. (Most of this gain is attributable to the difference in the economy eight years ago and now—but some is also attributable to new factors that are required under Senator Wiener’s SB 828). As a result, local communities and regions are going to have to be innovative. We are looking forward to their creative solutions.