It isn’t often that the entire board agrees at a San Diego Association of Governments meeting, but its directors united on one matter: The state’s affordable housing allocation is not working.
“We’re not addressing the true need for affordable housing,” said Terry Gassterland, a Del Mar City Councilmember and a university professor who said she has students sleeping in their cars.
“Who is tracking to see if the state legislation is achieving the so-called intended outcomes?” she asked. “There are unintended consequences.”
The state’s Regional Housing Needs Allocation is nearing the midway point of its sixth cycle. It’s a program in which the state predicts how much housing is needed, then allocates units regionally. SANDAG hands out shares of its allocation to smaller jurisdictions, which must then rezone to make way for additional housing units.
In the last cycle, which concluded in 2021, only 24 of the state’s 540 jurisdictions met their development goals, according to the UCLA Lewis Center for Regional Policy Studies.
“We local elected officials in this room represent 3.3 million people in the SANDAG region,” said Lesa Heebner, second vice chair of the board and mayor of Solana Beach. “I think that all of us in the room can agree that we need more affordable housing and that we should do our part to provide it. I also think we would all readily agree that RHNA could use some adjustments.”
In effort to remedy missed development goals, the state in 2023 passed Senate Bill 423, which mandates developer approval for certain projects in cities that have fallen behind their RHNA targets.
The bill is an extension and expansion of Senate Bill 35, which expires in 2026. The law will now apply until 2036.
Many SANDAG leaders said this change would place cities’ futures in the hands of developers, not elected officials. They asked leaders at the California Department of Housing and Community Development (HCD) to reconsider its allocations.
“The approach of making cities, which do not build housing, responsible for something they don’t do and can only influence, and then punishing them if they don’t (…) seems flawed at best,” Heebner said.
Coronado spent the first several years of the sixth cycle fighting its allocation of 912 units, a massive increase from the 52 units it was assigned in the fifth cycle. After losing in the courts, the city approved zoning changes for its compliant housing element update on April 9.
It took almost half of the sixth cycle for Coronado to develop its compliant plan. The current cycle ends in 2029.
“The process, in regard to Coronado, was an unmitigated disaster,” said Coronado City Council Member John Duncan, who represents the city on the SANDAG board.
The HCD came to Coronado to help the city develop a compliant housing element and agreed the city’s constraints rendered its allocation nearly impossible, Duncan said. After granting the city credit for planned military barracks housing, Coronado cobbled together a compliant plan.
Chief among Coronado’s challenges was finding land that was not controlled by the U.S. Navy or Port of San Diego, did not fall under a flight zone, and still fit HCD requirements of being a half-acre or larger.
“How many of those lots do you think exist in Coronado?” Duncan asked. “Basically none. That’s why (…) one of the lots that had to be included was our police station. We’re almost out. We don’t have any other lots.”
But the next cycle, and a fresh housing units allocation, Duncan said, is just around the corner.
In a nearly four-hour meeting, SANDAG representatives presented several solutions to their RHNA troubles.
It wasn’t just smaller cities, who have been most vocally opposed to how SANDAG allocated its housing quota in this cycle. Representatives from both the city and county of San Diego also said the process isn’t working for them.
“I’d like to ask that the overall number of housing units required in the sixth cycle, which is 2.5 million, be revisited,” Heeber said, addressing HCD Deputy Director Megan Kirkeby, who joined the meeting remotely. “I know you’re looking at the seventh cycle reforms, but the sixth cycle needs to be looked at.”
Santee: Let us take coastal cities’ units
The state develops regional housing allocations, and then SANDAG determines what portion individual cities will be responsible for.
Coronado’s sixth-cycle housing allocation was driven by the number of jobs in the city, which local leaders have long said was unfair because sailors stationed at Naval Air Station North Island inflated its numbers.
Coronado and three other small cities sued SANDAG over its 912-unit allocation, saying they could not fit that much new development in their cities, but ultimately lost. (SANDAG was, at the time, under leadership of a different board.)
Twenty miles east, however, Santee is trying to develop its land. When Mayor John Minto saw Coronado’s allocation of housing units, he looked around his own city.
“I’ve got 2,600 acres we’re looking to build on in my city,” he said. “I’ll take some of that, I’ll take some of those RHNA numbers. (But I was) clearly told: You can’t do that.”
Minto said allowing cities to trade allocations could create mutually beneficial outcomes for jurisdictions as well as a more cohesive regional plan. Instead, municipalities must develop their housing element updates independent of one another.
“That doesn’t make sense,” Minto said. “How do we work together as a region, if we can’t work together as a region?”
The state, as well as affordable housing advocates, say that to be truly affordable, housing must be built where jobs exist. Santee is relatively close to Coronado, but it’s a 30-to-40-minute commute from the East County city to NASNI.
Further, segregating affordable housing to its own regional pockets of land can create economic – and racial – divides in a region.
In Connecticut, where the state provides tax credits to build low-income housing, 88% of affordable housing units were built in low-opportunity neighborhoods, according to research from the ProPublica and the Connecticut Department of Housing.
That, of course, plays a heavy role in a person’s life: Worse schools, higher crime, less public transit, and fewer opportunities can push the poor down and keep them there.
Creating pockets of affordable housing can become a thorny legal issue as well. New York City has long granted priority for affordable housing units to people who live in the neighborhoods in which units are built. Currently, 50% of affordable units must go to those living nearby.
Supporters of the practice say it fights gentrification, but critics say it creates discriminatory, segregated housing.
The city was sued by the non-profit Anti-Discrimination Center and settled in January. As a result, New York will drop its preference for units for local residents to 15% over the next five years.
Does the RHNA drive housing costs up?
While the state requires that cities rezone to allow for more housing, it cannot require that the owners of rezoned land build it.
And, if owners do decide to develop, the state does not mandate that any development include affordable housing. That choice ultimately comes down to individual property owners, and the RHNA cycle presumes that some of the resulting housing will be designated as affordable.
To encourage affordable units, the state passed density bonus laws, which allow developers to bypass certain restrictions on height, setbacks, or parking spots per unit, in exchange for designating some units in its projects as affordable housing.
The density bonus laws also attempt to spread affordable housing units throughout the communities.
But Heebner said California’s affordable housing policy goals do not match reality. Instead, she said they pit market-rate and affordable-designated units against one another, raising rents for both.
Heebner said the state needs to allocate funding to help subsidize affordable housing.
“To solve a social problem, the state is relying on for-profit developers who are largely building luxury units, and giving them a fair number of perks through the legislation at the same time,” Heebner said.
“But there is a problem with this,” she continued, ”and that is the way that the private market pays for the subsidies for the affordable units – they don’t take it out of their profits. They are raising the rent on market-rate units.”
This, in turn, generates new comparables for existing housing, bringing rent up across the board. Because of the state’s rent control laws, which are meant to stop rent hikes, landlords are are disincentivized from renewing leases with long-term residents, Heebner argued.
“And so the cycle goes: New development leads to displacement, not just from demolition, but from the new area median rent rising,” Heebner said. “My city is, heartbreakingly, losing seniors, people of color, students, and our own kids and working-class families.”
The median home price in Solana Beach, where Heebner is mayor, is $2.7 million.
“In my city, we’re becoming wealthier,” Heebner said, “but we’re becoming less diverse. I know that’s not what everybody intended about this process, but it is real life. And I’ll say it again: It is heartbreaking to see what is happening.”
SB 423 and by-right development
In the past, cities rezoned for more units under the HCD’s housing cycles, but that didn’t mean units were built.
With SB 423 and SB 35 attempting to remedy that, leaders worry that developers will run rampant with projects that don’t take into consideration the needs of the city.
“We can meet our RHNA numbers,” said Ryan Keim, deputy mayor of Oceanside. “We’re doing our first general plan update in almost 40 years so that we can meet our 6,200 RHNA numbers without rezoning any of our single-family neighborhoods.”
But Keim said every time a proposed project arises in a single-family neighborhood, he can count on two things: Requests for waivers from design standards the city upholds, as well as a “threatening letter” from the HCD saying the city must approve it.
“I’ll tell you in my time in city leadership, the housing policy and legislation of Sacramento has been one of the most disappointing and disastrous things I’ve ever seen,” Keim said.
Leaders worry that, with such high six-cycle RHNA number and state legislation giving builders more leeway if cities are not on track to build, their housing allocations, the nuance of city planning will be taken from elected officials and given to developers.
SB 423 does not allow unilateral approval of projects, but it does require that cities who are behind on their housing goals approve projects if the following criteria are met:
- The project is located on an urban infill site which is zoned for residential or mixed uses and is consistent with objective design standards
- Developers pay certain wages and benefits as required by the state
- The site is not located on farmland, wetlands, a very-high risk fire zone, a hazardous waste site, floodplains and floodways, a habitat for protected species, or land under a conservation plan or easement
- The project follows all other applicable laws and ordinances.
“Every year, we’ve seen this push for more housing legislation,” Keim said. “But housing has gotten more expensive and the homelessness crisis has worsened. At a certain point, do we not step back and say, ‘This isn’t working?’”
