On June 21, 2021, the Orange County Council of Governments (OCCOG) filed a Petition for Writ of Mandate (“Petition”) in Superior Court, to which the cities of Redondo Beach, Lakewood, Torrance, Cerritos, Downey, and Whittier were subsequently added as petitioners, alleging that the California Department of Housing and Community Development’s (HCD) determination of regional housing needs administered by the Southern California Association of Governments (SCAG) was incorrect, lacking in substantial evidentiary support, and the result of a process that violated procedures prescribed by state law. Transgressions noted included HCD’s failure to properly calculate population and household statistics, among other things.

The suit alleges that HCD’s Regional Housing Needs Assessment (RHNA) determinations were

“…based on an incorrect application of law, and its failure to comply with Government Code section 65584.01(a) and (b), as well as its use of an unreasonable vacancy rate, was arbitrary and capricious. “ [Emphasis added]

And that

“… discrepancies between the projected housing needs of a local government and the number of housing units assigned to them in the RHNA allocation arise from HCD’s use of the wrong population forecast, regions that are not comparable to Southern California, and inaccurate and unattainable vacancy rates, as well as new methodology that grossly over estimates the projected housing needs by including overcrowding and cost-burdening factors that result in double counting the number of required dwelling units for the 6th Cycle. Such factors were not included in prior methodologies and such calculations are in violation of statutory law. (CT, 27.)” [Emphasis added]

And that

“HCD’s actions constituted an abuse of discretion, in that an exaggerated housing needs assessment not only subjects cities to the various penalties …if it fails to comply, but forces cities to rezone and accommodate increased residential housing, which can be particularly difficult in regions with little or no vacant land suitable for housing development. (CT, 28-29.)” [Emphasis added]

Both HCD and SCAP filed demurrers in the trial court, arguing that the petition should be dismissed because the court lacked the authority to rule on the case due to a previous Appellate Court ruling (City of Irvine v. Southern California Association of Governments (2009) 175 Cal.App.4th 506) that HCD’s RHNA determination process was not subject to judicial review.

In plain English, they claimed that HCD’s RHNA determination process could not be contested in the courts for any reason. On that basis, the trial court dismissed the case. This incorrect assumption by the trial court is the basis of the OCCOG’s appeal.

Background

The allegations in the OCCOG petition have been well documented for years in analysis by independent researchers and investigations and commentary by Gab Layton, President of the Embarcadero Institute. As summarized in The Planning Report, Ms. Layton’s research argues convincingly that

“The state’s approach to determining housing need must be defensible and reproducible if cities are to be held accountable for them.”

In her comments, Ms. Layton notes that HCD’s errors have resulted in over-estimating the demand for housing (and therefore RHNA quota amounts). Their use of incorrect vacancy rates and double-counting has caused HCD to exaggerate the housing needs in SoCal, the Bay Area, and Sacramento, alone, by almost one million housing units!

To put this in perspective, the total Regional Housing Need Determination from HCD for the entire San Francisco Bay Area in the current 2023 to 2031 housing cycle is only 441,176 new housing units.

Finally, she points out the profound failure of HCD’s RHNA calculation methods, saying,

“The state’s exaggerated targets unfortunately mask the real story: Decades of overachieving in market-rate housing has not reduced housing costs for lower income households.”

Similarly, the OCCOG petitioner’s arguments are corroborated in a scathing report from the office of the Auditor of the State of California. In their Audit Report to the California Legislature, they note,

“Overall, our audit determined that HCD does not ensure that its needs assessments are accurate and adequately supported. [Emphasis added]

“In reviewing the needs assessments for three regions, we identified multiple areas in which HCD must improve its process. For example, HCD does not satisfactorily review its needs assessments to ensure that staff accurately enter data when they calculate how much housing local governments must plan to build. As a result, HCD made errors that reduced its projected need for housing in two of the regions we reviewed.

“We also found that HCD could not demonstrate that it adequately considered all of the factors that state law requires, and it could not support its use of healthy housing vacancy rates. This insufficient oversight and lack of support for its considerations risks eroding public confidence that HCD is informing local governments of the appropriate amount of housing they will need.”

In addition, HCD’s needs assessments ostensibly rely on projections by the Department of Finance. Accordingly, the state auditor was critical of the department, too, saying, that they have,

“…not adequately supported the rates it uses to project the number of future households that will require housing units in the State. Although these household projections are a key component in HCD’s needs assessments, Finance has not conducted a proper study or obtained formal recommendations from experts it consulted to support its assumptions in this area.”

The OCCOG Appeal

In the OCCOG appeal brief, the substantive argument and issue of contention are that the trial court erred in deciding that HCD’s RHNA determination process was not subject to judicial review (being challenged in a court of law) because that court relied on the wrong case law in making their decision.As the brief notes,

“The trial court and Respondents view the issue raised in this case by Appellants as the same issue addressed in City of Irvine v. Southern California Association of Governments (2009) 175 Cal.App.4th 506. It is not the same issue.

“In City of Irvine, the city sought judicial review of SCAG’s RHNA allocation to the city, which is the second component of the RHNA process. The court of appeal in that case relied on the complex administrative review process in determining a COG’s RHNA allocation, as well as the Legislature’s deletion of specific statutory language which previously provided for judicial review of a COG’s RHNA allocation, in determining judicial review of such allocation is not allowed.

“The issue in this case, however, is HCD’s calculation of the RHN determination to SCAG as a whole, which is the first component of the RHNA process. The RHN determination process that HCD engages in is significantly different from the RHNA allocation process that a COG engages in, and is not subject to any administrative review process. Importantly, neither the Legislature nor the appellate court in City of Irvine concluded the courts have no jurisdiction over HCD’s RHN determination process.”

In other words, HCD does the initial calculation of the overall statewide housing need, then the local Councils of Governments (the “COG”) determine the housing quotas for each of the local governments within its jurisdiction (i.e., cities, and counties). For example, in the San Francisco Bay Area, the Association of Bay Area Governments, known as ABAG (the COG), allocates the gross Bay Area housing quota to each of the Bay Area’s 101 individual cities and counties.

As such, the OCCOG suit is not contesting the COG quota allocation process. It is contesting the total RHNA housing estimates produced by HCD, which are allocated by the COGs. And to do so, they are arguing that these determinations by HCD are subject to judicial review and therefore must be heard by the court.

This is potentially a seminal case

Although the petitioner’s appeal states that the resolution of this case will not directly impact the RHNA housing estimates for other COGs in California if the petitioners prevail in their arguments before the Court of Appeal and if that results in a published opinion, it will likely have enormous repercussions throughout the state. If the petitioner’s allegations prevail, the outcome would inevitably lead to other similar legal actions by other COGs and would likely “pull back the curtain” on the inner workings of HCD and reassessments of regional housing needs estimates for most of the state’s cities and counties. That would likely result in significant reductions in RHNA quotas throughout the state.

The truth is HCD has been getting away with its unsupervised, smoke-and-mirrors methods of determining California’s housing needs for far too long. HCD is an unelected and largely unaccountable state agency run by political appointees who are more beholding the moneyed lobbyists, construction labor unions, developers, investment bankers, and corporate interests than the public they are supposed to serve. The agency’s relationship with well-funded, “nonprofit advocacy” groups has become so incestuous that they now employ case managers who have no real experience or credentials in housing, development, or planning and whose only major qualifications are being former (and even active) members of California YIMBY, a private, corporate-funded, advocacy organization that is actively suing California cities and counties to force approval of high-density development in SF Bay Area communities.

The obvious conflicts of interest are appalling.

One can only hope that justice will prevail and that the entire RHNA system will be subject to future legal challenges to ensure its veracity. However, it remains unfortunate that so few cities and counties have had the courage to voice their support for the petitioners, choosing instead to cower to HCD’s ongoing abuse of power.

As the appeal brief states,

“If traditional mandamus were wholly precluded on the facts before this Court, municipalities throughout the State would have absolutely no remedy for a violation of the housing element law by HCD, much less a plain, speedy, and adequate remedy. HCD would be permitted to act with complete impunity, to the detriment of cities and counties. But there is absolutely nothing in either the RHNA statutes themselves or the legislative history to demonstrate that the Legislature, which has the power to abridge the jurisdiction of courts, ever intended to do so with respect to judicial review of HCD’s RHN determination and process. Government agencies can overstep their limits and violate ministerial or administrative procedures. Part of the function of the courts is to address such abuses of discretion, and the courts should be permitted to do so in this context.

“Any other decision by this Court abrogates the constitutional provisions which provide the judicial branch with original jurisdiction to perform mandamus review of administrative decisions. There is no statutory administrative review or remedy for member municipalities of the COG, and no further administrative review or remedy for COGs aside from an objection, which the trial court’s ruling would allow HCD the unreviewable ultimate authority to accept or reject. In light of the lack of legislative directive or intent depriving courts of their jurisdiction over mandamus review in this context, a municipality’s right to seek judicial review of HCD’s violation of the RHN statutes must be upheld.”

Bob Silvestri is a Marin County resident, the Editor of the Marin Post, and the founder and president of Community Venture Partners, a 501(c)(3) nonprofit community organization funded by individuals and nonprofit donors. Please consider DONATING TO THE MARIN POST AND CVP to enable us to continue to work on behalf of California residents.