Officials Question Methods Used to Determine California Housing Quotas

A construction site in Anaheim, Calif., on Jan. 8, 2021. John Fredricks/The Epoch Times

Changes to the way state-imposed zoning quotas for new housing units are calculated have created unnecessarily high allotments throughout Southern California, critics say.

The changes, made “behind the scenes” in 2019, have tripled the number of homes required to be built in the Southern California region over the next eight-year cycle to more than 1.3 million, a burden that some local officials say is unreasonable.

Proponents say the change was needed to make the assessment more accurately reflect regional needs—although local officials argue the changes have more to do with zoning issues than affordable housing units, and say the calculations have been created to substantiate an agenda rather than solve a crisis.

Paavo Monkkonen, associate professor of Urban Planning and Public Policy at the University of California–Los Angeles (UCLA) Luskin School of Public Affairs, told The Epoch Times cities are going to have to zone for higher-density housing to meet the state’s goals.

Monkkonen says the latest housing quotas will “actually require cities to change zoning in many cases to allow for more housing to be built,” thus making the plan more controversial.

“I can understand that people are resistant to change, and people that live in low-density neighborhoods near major job centers would prefer to keep things that way,” he said.

“But if the state wants to achieve goals around climate and goals around social equity, then allowing richer neighborhoods near a lot of jobs to prevent new housing from being built means that people have to commute from far away and lower-income people can’t live there. And I just think it’s a problem.”

The change in the methodology in 2019 has left some city council members and city planners in a quandary over why the quotas are so high, how and why the formula was changed, and how they will meet the state’s demands.

The RHNA Methodology

The Regional Housing Needs Assessment (RHNA) methodology is used by the state to determine how housing quotas in the Southern California region are divided among 191 cities in six counties.

According to the latest assessment, municipal governments must come up with zoning to allow for around 1.34 million new housing units by October 2029. Of those units, 183,861 are allocated to Orange County, 812,060 to Los Angeles County, 167,351 to Riverside County, 138,110 to San Bernardino County, 24,452 to Ventura County, and 15,993 to Imperial County.

But a person who has experience dealing with RHNA calculations and spoke on condition of anonymity, told The Epoch Times that it’s doubtful the state’s housing goals will be met, in part because of confusing regulations.

“My personal opinion is it’s not going to happen,” the person said. “They passed a whole bunch of housing laws that we’re currently dealing with. There’s so many of them, I can’t keep track.”

To zone for new units, “there are requirements that we have to follow which are very different than last cycle,” the person added. “You hear about the AFFH [Affirmatively Furthering Fair Housing], disadvantaged communities, environmental justice, equity. All of that kind of comes into play.”

The Southern California Association of Governments (SCAG) oversees the mandates for the region. In 2019, SCAG staff recommended around 800,000 new housing units for the area—but the SCAG Regional Council reduced the figure to previous levels of about 400,000, the person said, similar to the quotas for RHNA’s fifth cycle, which ends in October.

When that happened, the state became perturbed, according to the source.

“They were cutting it in half, which basically angered the state, and that’s how we ended up in the SCAG region with the 1.3 million number.”

Earlier this year, more than a dozen Orange County cities pushed back against the latest allocations, but the appeals were denied.

The RHNA plan is required by the California Department of Housing and Community Development (HCD) under state law. In March, HCD approved the new RHNA plan for the next eight-year cycle, which begins in October 2022.

“The plan goes further in promoting greater housing development near jobs and transit availability than did earlier methodology proposals,” according to a November 2019 SCAG release. At the time, the SCAG Regional Council approved the modified methodology by a 43–19 vote.

New construction moves forward in the Portola Springs neighborhood of Irvine, Calif., on Feb. 16, 2021. John Fredricks/The Epoch Times

New homes are built in the Portola Springs neighborhood of Irvine, Calif., on Feb. 16, 2021. John Fredricks/The Epoch Times

Scrapping Local Input

Monkkonen, a former ex-officio member of SCAG, wrote a letter in August 2019 to SCAG President Bill Jahn, urging the association to scrap the “local input” component of the RHNA methodology. The letter, with the support of more than 25 other professors, suggested the changes “would allocate regional housing need in a way that advances environmental sustainability, and affirmatively furthers fair housing in the region.”

In the letter, Monkkonen said that for too long, California’s fair housing law and regional planning process has been “a paper exercise.”

“A process of aggregating the preferences of cities is not regional planning, and if SCAG continues to assign housing needs as they have in the past not only will it fail to accomplish goals of furthering fair housing, promoting sustainable infill development, and accommodating people of all incomes in the region, but it will also mandate housing sprawl and unfairly burden the least well off cities in the region,” the letter stated. “The time to change this process is now.”

Anaheim City Councilman Trevor O’Neill, who serves on the SCAG Regional Council, told The Epoch Times that he questions “whether it’s appropriate for an ex officio to direct staff.”

“It reinforces my belief that the methodology was activist driven. I’ve read a couple of his papers and he is definitely an activist for high-density housing,” O’Neil said.

According to Monkkonen, SCAG planner Kevin Kane was in charge of the RHNA methodologies at the time. Kane didn’t respond to inquiries by The Epoch Times prior to publication.

However, SCAG staff told The Epoch Times in an email “the bottom line” is that state housing law changed over 2017–2018.

“In past RHNA cycles, the emphasis has really only been on future housing need, but in this cycle the state required an emphasis on unmet need that has been building up,” the email stated. It added that “explicit measures of ‘existing housing need’—mainly overcrowding and cost burden—became part of the state’s formula for determining a region’s total housing needs.”

According to the email, the state “gained additional oversight authority” over how SCAG allocates the total number of housing units across 197 local jurisdictions in the region.

“The cumulative result of this is that locally reviewed growth visions, which had comprised the bulk of past RHNA cycles, were no longer sufficient,” the email said.

“The board’s final methodology for allocating units still included local input but also relied heavily on other factors—namely job/transit access (directly responsible for about 60 [percent] of the final allocation) and Affirmatively Furthering Fair Housing—which ultimately was approved by the state.”

Fair Housing and Segregation

In his letter, Monkkonen advocates for policies that “affirmatively further fair housing,” a reference to Assembly Bill 686 (AB 686), which was approved in 2018. The law “requires all state and local public agencies to facilitate deliberate action to explicitly address, combat, and relieve disparities resulting from past patterns of segregation to foster more inclusive communities.”

The passage of AB 686 protects this requirement to “affirmatively further fair housing” within California state law, regardless of future federal actions. The federal Affirmatively Furthering Fair Housing (AFFH) rule required jurisdictions receiving funding for housing to show proof they were actively working to prevent housing segregation.

The rule was signed into law a week after civil rights icon Martin Luther King Jr. was assassinated in 1968 but was largely considered a paper tiger until the Obama administration gave it teeth in 2015.

The revised AFFH rule required local governments to document how they were working to undo segregation—rather than only preventing it—by completing comprehensive Fair Housing assessments to qualify for Department of Housing and Urban Development (HUD) funding.

But in 2020, former President Donald Trump nixed the AFFH rule, which President Joe Biden has vowed to restore.

Monkkonen pointed out that other state legislation—Assembly Bill 1771 (AB 1771) and Senate Bill (SB 828), passed in 2018—has affected housing quotas.

“SB 828 required the regional number to include existing need for housing, which it had not before. So regional numbers were much bigger this time than they had been in previous cycles because of that change,” he said.

The new law prohibited cities from carrying over “unmet housing quotas” from one RHNA cycle to the next, to prevent them “from being used as a justification for a determination or a reduction in the jurisdiction’s share of the regional housing need,” according to language contained in the bill.

Monkkonen said that local inputs in the methodology consist of both existing regional housing needs and projected growth needs.

“When the SCAG methodology committee was figuring out how to divide up the regional need, they talked about those two numbers separately,” he said. “They talked about how are we going to divide up our projected growth part and how are we going to divide up our existing need part, which I think made it more confusing than it had to be.”

‘Political Maneuvering’

Nate Farnsworth, the principal city planner for Yorba Linda and chair of the Technical Advisory Committee (TAC) for the Orange County Council of Governments (OCCOG), has prepared a timeline to explain what happened at SCAG to cause such a tectonic shift in housing quotas.

He explained to The Epoch Times how SCAG staff altered the methodology “behind the scenes.”

Housing needs assessments had previously been calculated based on a formula that included three factors: projected household growth (50 percent), job accessibility (25 percent), and population within high-quality transit areas (HQTAs) (25 percent).

But in 2019, then-Riverside Mayor Rusty Bailey proposed to eliminate local input on projected household growth from the equation. Bailey’s proposal was supported by Los Angeles Mayor Eric Garcetti, but ultimately failed.

Prior to Bailey’s proposal, SCAG staff had looked at three different methodology options, Farnsworth said.

“They kind of took the three options, and they sort of created a hybrid of those three options and presented that to the RHNA subcommittee,” Farnsworth said.

“Bailey didn’t like some parts of it and so he tried tweaking it a little bit, but didn’t get support from the subcommittee. So the hybrid method that SCAG staff put together moved forward from the RHNA subcommittee, and then that was presented on Oct. 21 to the Community, Economic and Human Development Committee [CEHD] at SCAG.”

Sometime between the CEHD Committee meeting on Oct. 21, 2019, and the SCAG Regional Council meeting on Nov. 7, 2019, the methodology changed, Farnsworth said.

“That’s when you have this political maneuvering that happened behind the scenes, and something shifted in the methodology that caused a significant change.”

He added, “What was presented to the Regional Council by SCAG staff is not what Mayor Bailey had proposed at the RHNA subcommittee meeting—so SCAG staff actually further altered what Mayor Bailey had proposed.”

SCAG staff “came up with their own new strategy that they felt would get HCD support, and they based it off of Bailey’s proposal. They made a couple minor tweaks that created a significant change in the RHNA methodology.”

That change disproportionately shifted the bulk of the housing burden to Orange County cities, Farnsworth said.

“What Bailey wanted to do was remove local input in the number that was used to calculate the existing needs of RHNA and only have it based off of job accessibility and high-quality transit areas,” he said. “That failed at the RHNA subcommittee meeting. So, what SCAG staff presented as the Bailey method in November was totally different than what he had proposed.”

According to Farnsworth’s timeline, on Nov. 1, 2019, Bailey and regional councilmembers Karen Spiegel and Toni Momberger submitted a letter introducing a new, alternative RHNA methodology. The modified methodology added two new components to Bailey’s earlier proposal “to redistribute residual units within the county of origin instead of regionwide.”

It also eliminated the cap on RHNA allocations based on a jurisdiction’s growth forecast, with the exception of disadvantaged communities (DACs), and “removed the redistribution methodology from redistributing only to jurisdictions only in both high transit and high jobs areas to redistributing to all non-DAC jurisdictions.”

“The SCAG staff report included two new additional components that had never been considered by the RHNA subcommittee or CEHD, and that was a proposal to eliminate a cap on RHNA based on a jurisdiction’s growth forecast with the exception of disadvantaged communities,” Farnsworth said.

“The original plan was that they were going to redistribute only to jurisdictions that were both high transit and high jobs areas, rather than redistributing to all jurisdictions that weren’t disadvantaged communities; SCAG staff removed that provision, which really had a major impact on Orange County cities,” he said.

This explains why several Orange County cities appealed the RHNA allocations and asked that Santa Ana, which is designated as a disadvantaged community, take a larger share of the housing allocation, Farnsworth said.

Anaheim Councilman Trevor O'Neil in Anaheim, Calif., on Jan. 8, 2021. John Fredricks/The Epoch Times

Carrots and Sticks

Anaheim’s O’Neil told The Epoch Times that Gov. Gavin Newsom has taken a “carrot-and-stick” approach when it comes to enforcement of housing quotas.

While Newsom has threatened to levy hefty fines for noncompliance, no cities have been fined. However, cities will miss out on huge housing grants if their RHNA plans aren’t certified, O’Neil said.

The city of Huntington Beach has been embroiled for years in legal wrangles over RHNA demands to zone for more affordable housing units in the city. In 2019, the state sued the city for failing to meet its RHNA quotas, but later dropped the suit when the city agreed to zone for hundreds of additional affordable housing units in order to qualify for a $650,000 grant.

“Currently there aren’t any penalties for not building enough housing,” SCAG staff said in an email. “However, there are some consequences if a city hasn’t zoned for enough units,” including potential permit issues for developers.

According to SCAG staff, “the minimum requirement for cities under California housing law is to make sure that they can accommodate housing need through zoning.”

HCD has authority over compliance issues—not SCAG, whose role is “strictly to allocate,” the email stated.

Transit Oriented Development

State housing policies are built on the idea of sustainable living and transit oriented development (TOD).

Theoretically, TOD would create pedestrian-oriented, mixed-use neighborhoods to reduce dependence on individually owned gas-powered cars, thereby reducing carbon emissions from fossil fuels. Instead, these bikeable and walkable urban sustainable communities would be built near job centers and public transit hubs, including high-speed rail systems.

HCD’s TOD Housing Program, for example, provides grants and loans for housing projects that aim “to increase public transit ridership by funding higher density affordable housing developments within one-quarter mile of transit stations.”

HCD’s stated objectives for the RHNA plan include promoting an improved intraregional relationship between jobs and housing, infill development, and socioeconomic equity.

Newsom’s ‘Stretch Goal’

O’Neil said the housing goals are “completely unattainable,” adding that “even the governor himself characterized it as a ‘stretch goal.’”

Before being elected in 2018, Newsom made a campaign promise to build 3.5 million new housing units in the state by 2025, which would have meant setting a housing construction rate nearly four times faster than in recent years. He has since conceded that the housing target may have been too lofty, calling it a “stretch goal.”

But the 3.5 million is what sets the benchmark for the entire “housing crisis” in California, and discussions about housing often lead back to that number, according to several sources.

Newsom derived his figure from a 2016 McKinsey & Co. housing study based on the assumption California should have the same per capita housing level as New York. The Embarcadero Institute, based in Palo Alto, California, released its own critical analysis suggesting Texas would have been a better model for comparison, and estimating that the state’s real housing need is closer to 1.4 million units.