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6th CYCLE RHNA: Impossible numbers

RHNA and Housing Elements

California has 8 year housing cycles, and localities are tasked by the HCD (California Department of Housing and Community Development) with demonstrating they have the capacity for the housing assigned in their RHNA (Regional Housing Needs Allocation ) — by submitting a required “housing element” document. But the rules have changed in this, the 6th cycle. Numbers are larger — as much as 20x more housing is mandated. And cities are no longer just required to zone for and site the housing, a developer must actually pull a permit to build it or it’s not counted.  Cities have no control over that process, but they are penalized heavily if they fail to get certification of their housing elements. Localities appealed the larger numbers, but all appeals were rejected. Based on city concerns and discrepancies, two audits were requested.   

LET'S START WITH REAL NUMBERS:

The state demands 2.5 million more residences by 2031, regardless of each city’s actual needs. Why? The  California Department  of Finance refuted the numbers in 2023 — projections show the population will not grow 7+ million by 2031; it‘s projected almost flat through 2060. That’s  not due to lack of housing. It’s due to our aging population, declining birth rates, economic realities, higher outmigration, and lower in-migration.


In other words, the mandates are based on “aspirations,” not need. 

But the HCD isn’t backing off the outrageous numbers, instead supporting ”ad hoc” methodology that intentionally over burdens cities . See the blog post “Think those RHNA numbers are based on something scientific?” 


https://citizenmarin.org/blog/f/think-those-rhna-numbers-are-based-on-something-scientific

TWO HCD AUDITS, TWO FAILURES

Request Letter for HCD/RHNA Audit

Full letter here:

https://legaudit.assembly.ca.gov/sites/legaudit.assembly.ca.gov/files/Regional%20Housing%20Needs%20Determination%20Process%20%28Sen.%20Glazer%29.pdf


Full report here:  https://information.auditor.ca.gov/reports/2021-125/index.html

Request Letter for Housing Element Audit

Full letter here:

https://legaudit.legislature.ca.gov/sites/legaudit.assembly.ca.gov/files/2024-109%20%28Sen%20Glazer%29%20HCD—Housing%20Elements_Signature%20Redacted.pdf


Full report here:

https://www.auditor.ca.gov/reports/responses-2024-109-all/ 


HCD reply here: 

https://www.hcd.ca.gov/about-hcd/newsroom/ca-state-auditor-finds-hcd-meets-deadlines-housing-element-reviews-and-provides-jurisdictions-consistent-detailed-feedback-and-guidance


Excerpts / Comments on 2021 RHNA audit

HCD / RHNA Audit Excerpt

HCD / RHNA Audit Excerpt

HCD / RHNA Audit Excerpt

“As directed by the Joint Legislative Audit Committee, my office evaluated the Regional Housing Needs Assessment …Overall, our audit determined that HCD does not ensure that its needs assessments are accurate and adequately supported…This insufficient oversight and lack of support for its considerations risks eroding public confidence…“


The HCD has stood firm; this paper submitted in support of the RHNA acknowledges that the numbers were ad-hoc, model-based.

Background Paper for Audit of Regional Housing Needs Determination Process
Elmendorf et. al. Cover Letter:
https://law.ucdavis.edu/sites/g/files/dgvnsk10866/files/inline-files/RHNA-Audit-Cover-Letter-2022.01.04_0.pdf

Elmendorf et. al. Report:

https://law.ucdavis.edu/sites/g/files/dgvnsk10866/files/inline-files/RHNA-Audit-Background-Paper-2021.01.04.pdf

“Numbers Not Supported”

HCD / RHNA Audit Excerpt

HCD / RHNA Audit Excerpt

JULY 2023: California Department of Finance releases official population projections showing practically flat growth through 2060. Needs assessment must be based on official  population projections. They are not. . 


On the Department of Finance Report

https://marinpost.org/blog/2023/1/9/rhna-abag-demographic-projections-are-way-off

https://www.marinij.com/2022/04/18/marin-critics-of-housing-mandates-tout-auditors-findings/  


https://www.mercurynews.com/2023/07/26/california-exodus-state-population-projected-to-remain-the-same-through-2060/


https://www.globest.com/2023/07/28/california-projects-zero-population-growth-through-2060/


Why Real Numbers Matter

HCD / RHNA Audit Excerpt

Why Real Numbers Matter

Sample of a rejected RHNA appeal based on changed conditions: Mill Valley:

 https://abag.ca.gov/sites/default/files/documents/2021-07/2023-2031_RHNA_Appeal_City_of_Mill_Valley.pdf

https://marinpost.org/blog/2023/10/5/sacramento-has-a-long-history-of-overestimating-population-growth?query=Gaetan+lion§ion=blog


More:
https://marinpost.org/blog/2023/11/29/does-sacramento-housing-existing-need-even-exist?query=Gaetan+lion§ion=blog 

Excerpts from 2024 HOUSING ELEMENT audit

Housing Element Audit Excerpt

Housing Element Audit Excerpt

Housing Element Audit Excerpt

“HCD interprets the housing element law and determines whether local jurisdictions’ housing elements substantially comply with it. HCD then issues findings letters to local jurisdictions to notify them of its compliance determination, but the law does not require these letters to provide prescriptive instruction for achieving compliance.”

Housing Element Audit Excerpt

Housing Element Audit Excerpt

Housing Element Audit Excerpt

“Staff availability during its peak workload constrained HCD’s ability to provide important individualized assistance to local jurisdictions. Even with HCD’s comprehensive training program for new reviewers and reliance on experienced secondary reviewers to ensure consistency, turnover and overlapping submission deadlines have strained its capacity.“

Housing Element Audit Excerpt

Housing Element Audit Excerpt

Housing Element Audit Excerpt

“The complexity of new legal requirements, increased housing allocations, and community resistance to new development, mean that most local jurisdictions required multiple submissions and significant time to achieve compliance during the sixth housing element cycle. … Although HCD offers detailed online guidance to help jurisdictions, it did not always release this guidance in a timely manner.”

What the audits found

Two audits were authorized

The audits checked compliance They did not check reality

Two audits were authorized

The audits were requested due to wide distrust and the number o cities filing appeals.


What they reviewed:

• Whether HCD followed statutory procedures.

• Whether DOF provided projections.

• Whether regional agencies ran appeals.


What they did not review:

• Whether RHNA numbers are empirically realistic.

• Whether California can finance, staff, or build at those levels.

• Whether targets match actual population trends

The system failure

The audits checked compliance They did not check reality

Two audits were authorized

Cities are now penalized if housing is not built,

even though only private developers control whether projects pencil out.

State law assigns responsibility for market outcomes to governments that do not control land prices, labor, interest rates, or capital flows.


All cities will likely fail their mid cycle reviews. What kind of legitimate test has a 100% failure rate? 


This is not planning.

It is regulatory wishful thinking


The audits checked compliance They did not check reality

The audits checked compliance They did not check reality

The audits checked compliance They did not check reality

THE CORE QUESTION CALIFORNIA REFUSES TO ANSWER:


If California’s population will remain flat:


Who exactly are the 2.5 million new homes for?


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