Two bills proposed to modify the Builder's Remedy under the Housing Accountability Act (HAA) (Gov. Code § 65589.5(d)(5)) are currently making their way through the State Legislature. Assembly Bill (AB) 1893, proposed by Assemblymember Wicks, would (i) reduce the required percentage of affordable units for a Builder’s Remedy project from 20% to 10% where lower income units would be provided and (ii) create a new basis for denying a Builder’s Remedy project, including where the residential density of the project would be lower than otherwise permitted. AB 1886, proposed by Assemblymember Alvarez, would clarify the necessary conditions for a Housing Element to be deemed in “substantial compliance” with State Housing Element Law. That determination is important, as it dictates whether the local jurisdiction must accept and process Builder's Remedy applications.

The following provides background on the Builder's Remedy and then summarizes the key changes proposed by AB 1893 and AB 1886.

BACKGROUND

As we previously reported, the Builder’s Remedy applies when a local jurisdiction has not adopted an updated Housing Element in substantial compliance with State Housing Element Law (Gov. Code § 65580, et seq.), in which case the local jurisdiction cannot deny a qualifying housing development project even if it is inconsistent with the local general plan and zoning ordinance (subject to limited exceptions).

To qualify, the project must currently (i) fall under the definition of a “housing development project” under the HAA (i.e., a project consisting of residential units only, mixed-use developments consisting of residential and non-residential uses with at least two-thirds of the square footage designated for residential use, or transitional or supportive housing) and (ii) dedicate at least 20% of the dwelling units in the project as lower income (or 100% of the units as moderate income), as defined in the HAA.

Use of the Builder's Remedy has surged over the past two years, as local jurisdictions statewide have struggled to adopt, or have resisted adopting, a Housing Element that is in substantial compliance with State Housing Element Law. Responding to this flurry of activity, Assemblymembers Wicks and Alvarez have proposed various amendments to the law as summarized below.

AB 1893

As currently proposed, AB 1893 (Wicks) would reduce the required percentage of affordable units for a Builder’s Remedy project from 20% to 10% where lower income units would be provided. This amendment would presumably make Builder's Remedy projects more financially viable by increasing developer return.

AB 1893 also addresses the most controversial aspect of the Builder's Remedy, which is that a local jurisdiction without a substantially compliant Housing Element cannot deny a qualifying Builder’s Remedy project unless specified findings are made, including but not limited to a finding that the project would have a specific, adverse impact upon the public health or safety, and there is no feasible method to satisfactorily mitigate or avoid the specific adverse impact without rendering the development unaffordable to lower income households. This is intended to create a high threshold for local jurisdictions.

As currently proposed, AB 1893 would create an additional available finding under Government Code § 65589.5(d) that a local jurisdiction could utilize to deny or conditionally approve a qualifying Builder’s Remedy project even if the local jurisdiction does not have a substantially compliant Housing Element, so long as the Builder’s Remedy project is proposed on a site that is zoned for residential or residential mixed-use development. This finding would require a local agency to also prove, by a preponderance of the evidence, that the project falls under one or more of the following categories:

• Excessively dense, which would in turn require the local jurisdiction to prove that the project exceeds all of the following:
  • • The maximum allowable density based on the general plan land use designation of the site;
    • The maximum density appropriate to accommodate (lower income) housing for the local jurisdiction as specified in Government Code section 65583(c)(3)(B) (e.g., for a local jurisdiction in a metropolitan county, 30 dwelling units per acre);
    • Twice the density allowed by local law; and
    • Twice the density otherwise allowed by state law (e.g., the State Density Bonus Law).
• Less dense than the minimum allowed by state or local law, whichever is greater.
• Fails to meet objective, quantifiable, or written development standards to accommodate development at the greatest density permitted for the site.

There is currently no codified upper limit on permitted density for qualifying Builder’s Remedy projects. It appears that the “less dense” category is intended to close the loophole on Builder’s Remedy projects that reduce (versus exceed) the otherwise applicable residential density limit, which would reduce planned housing production and thus impede a local jurisdiction’s ability to meet its state-mandated Regional Housing Needs Allocation (RHNA).

AB 1886

A recent Builder's Remedy lawsuit exposed some ambiguity regarding when a Housing Element is deemed “substantially compliant” with State Housing Element Law. Opposing sides of the litigation disputed whether (retroactive) self-certification by the local jurisdiction was sufficient. The court ruled that it was not. See our prior legal alert for our coverage of this ruling, which appears to be the impetus for the amendments proposed under AB 1886.

As currently proposed, AB 1886 would:

• Clarify the point at which a Housing Element is deemed substantially compliant with State Housing Element Law: (i) the Housing Element has been adopted by the local jurisdiction and (ii) the local jurisdiction has received an affirmative determination of substantial compliance from HCD or a court of competent jurisdiction.
• Clarify that the Housing Element shall continue to be considered in substantial compliance with State Housing Element Law until either: (i) HCD or a court of competent jurisdiction determines that the adopted Housing Element is no longer in substantial compliance (e.g., where any required rezoning is not approved in a timely manner) or (ii) the end of the applicable Housing Element cycle.
• Specify that Housing Element compliance status is determined at the time the SB 330 Preliminary Application is submitted for the qualifying Builder’s Remedy project, which is consistent with HCD’s prior determination that the Builder’s Remedy is vested on that filing date. If a SB 330 Preliminary Application is not submitted, then the compliance status would be determined when a complete development application (as defined) is filed for the Builder’s Remedy project.
• Require a local jurisdiction that adopted its Housing Element despite HCD's non-compliance determination to submit the required findings, as specified, to HCD. In any legal proceeding initiated to enforce the HAA, HCD's determination on the required findings would create a rebuttable presumption of substantial compliance or lack thereof.

IMPLICATIONS

The amendments proposed by AB 1893 and AB 1886 are critical to the utilization of the Builder’s Remedy, particularly in hostile local jurisdictions. It would now be clear that a local jurisdiction cannot “self-certify” its Housing Element. Rather, an affirmative determination must be granted by HCD or, if a local jurisdiction adopts its Housing Element notwithstanding HCD’s determination to the contrary, a court of competent jurisdiction would need to agree with the local jurisdiction, notwithstanding the “rebuttable presumption” in favor of HCD’s non-compliance determination, where applicable.

Reducing the required percentage of affordable units for a Builder’s Remedy project from 20% to 10% where lower income units would be provided should result in an up-tick in Builder’s Remedy applications, which should in turn increase the pressure on local jurisdictions to comply with State Housing Element Law in a timely manner.

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