United States: Many California Local Governments Face Tight Rezoning Deadlines

Highlights

• Many local governments across California are still struggling to adopt housing plans (Housing Elements) that satisfy the state's Department of Housing and Community Development (HCD).
• To accommodate new housing targets, many jurisdictions' Housing Elements commit to rezoning certain sites to increase the allowable residential density.
• State law requires that this rezoning must occur by a set deadline, which is stricter for jurisdictions that receive late approval of their Housing Elements.
• Jurisdictions that miss these deadlines face penalties, including mandatory approval of affordable residential projects and potential Housing Element decertification.

California housing law requires every city and county in the state to update the Housing Element of that jurisdiction's General Plan every eight years. Among other things, each updated Housing Element must plan for the jurisdiction's new Regional Housing Needs Assessment (RHNA) allocation – a measure of how many new homes that jurisdiction is expected to accommodate during the eight-year period. The state is currently transitioning from the fifth to the sixth eight-year planning cycle, and the deadlines for most jurisdictions to adopt compliant Housing Elements have already passed.

• San Diego Association of Governments (SANDAG) jurisdictions: April 15, 2021
• Sacramento Area Council of Governments (SACOG) jurisdictions: May 15, 2021
• Southern California Association of Government (SCAG) jurisdictions: Oct. 15, 2021
• Association of Bay Area Governments (ABAG) jurisdictions: Jan. 31, 2023
• Santa Barbara County Association of Governments (SBCAG) jurisdictions: Feb. 15, 2023
• Association of Monterey Bay Area Governments (AMBAG) jurisdictions: Dec. 21, 2023¹

Many jurisdictions have missed these deadlines, often significantly so. Among other potential penalties, these lagging jurisdictions face expedited timelines to complete one specific aspect of their housing plans: rezoning. (See Holland & Knight's previous alert, "'Builder's Remedy': Bay Area Will Soon Face a Powerful Housing Tool," Oct. 21, 2022.)

Rezoning Deadlines

To plan for its sixth-cycle RHNA allocation, each jurisdiction's revised Housing Element must include a sites inventory that indicates where the new housing is expected to be developed. Often, the sites identified need to be rezoned – either to allow residential uses or to increase the allowable residential density – to allow for housing at the promised densities. In such instances, the jurisdiction's Housing Element must commit to actually implementing the rezoning through the local legislative process.

State housing law sets deadlines for implementing the rezoning promised in the Housing Element. These deadlines are far more lenient to jurisdictions that have their Housing Elements approved by the Department of Housing and Community Development (HCD) in a timely fashion. For jurisdictions that have their Housing Elements certified by HCD by the statutory deadline or no more than 120 days after the deadline, those jurisdictions must complete any required rezoning within three years of the date the Housing Element was adopted.²

However, 2022's AB 1398 shortened the timelines for jurisdictions that fail to receive Housing Element approval within 120 days of the deadline. Those jurisdictions must now complete any required rezoning within one year.³ Moreover, whereas the more lenient three-year rezoning period is pegged to the actual date of adoption, the one-year rezoning period is pegged instead to the compliance deadline itself. This means that, in practice, jurisdictions that miss the 120-day grace period for compliance will have at most eight months to complete their rezoning.

To illustrate this distinction, consider two Bay Area jurisdictions, both of which missed the Jan. 31, 2023, deadline for Housing Element certification.

• The first jurisdiction had its Housing Element certified on May 31, 2023 – 120 days after the Jan. 31 deadline – and adopted the Housing Element the same day. This jurisdiction must complete any required rezoning within three years of the actual date of adoption: May 31, 2026.
• The second jurisdiction had its Housing Element certified on June 1, 2023 – 121 days after the Jan. 31 deadline – and adopted the Housing Element the same day. Because it missed the 120-day grace period, that jurisdiction has only one year from the adoption deadline to complete its required rezoning: Jan. 31, 2024.⁴

Penalties for Failing to Rezone

Jurisdictions that fail to implement the promised rezoning by the deadline face several penalties. First, their discretion is limited with respect to residential projects that are at least 49 percent affordable and are located on a to-be-rezoned site. Specifically, jurisdictions are prohibited from requiring a conditional use permit or other discretionary permit for such projects. Late-to-rezone jurisdictions are also prohibited from disapproving such projects unless they are able to make project-specific health and safety findings.⁵

Second, jurisdictions that miss the rezoning deadlines are subjected to a process whereby HCD reviews the jurisdiction's inaction and potentially revokes its prior approval of the Housing Element. At that point, any penalties associated with Housing Element noncompliance such as the Builder's Remedy will snap back into place.

One final category of jurisdiction bears special mention: jurisdictions that miss the Housing Element deadline by more than one year. State housing law specifically states that any such jurisdiction "shall not be found in substantial compliance" with state housing law "until it has completed the rezoning" promised by its Housing Element.⁶ These jurisdictions, therefore, remain out of compliance even after HCD certifies their housing elements. Only the final passage of the promised rezoning brings them into compliance.

Importantly, 2022's SB 197 granted Southern California jurisdictions a reprieve from the one-year expedited deadline, placing those jurisdictions on a separate schedule.⁷ For this reason, the Bay Area jurisdictions, which have the earliest timeline of the nonexempt jurisdictions, will be the first to experience these expedited rezoning deadlines and their consequences.

For most (nonexempt) cities and counties across the state, the applicable Housing Element adoption deadlines have already passed, as has the 120-day grace period needed to secure the more lenient rezoning timeline. It remains to be seen whether jurisdictions that have lagged behind thus far will be able to turn things around and meet their expedited rezoning deadlines or will instead risk Housing Element decertification.

Takeaways

While much has been written about the deadlines for Housing Element certification and the consequences of failing to meet them, those deadlines are not the end of the story. Many jurisdictions will need to enact legislation to implement promised rezoning and do so on an expedited time frame or risk decertification and reduced discretion over affordable projects.

Footnotes

1. Deadlines for other jurisdictions are available on the California Department of Housing and Community Development website.

2. Gov. Code § 65583(c)(1)(A).

3. Gov. Code § 65583(c)(1)(A); Gov. Code § 65588(e)(4)(C).

4. Note that these deadlines may be extended by one year if, prior to the deadline, the jurisdiction has already rezoned to accommodate 75 percent of the units designated for low-income and very low-income households in certain circumstances. Gov. Code § 65583(f).

5. Gov. Code § 65583(g).

6. Gov. Code § 65588(e)(4)(C)(iii).

7. Gov. Code § 65583.4.

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