The Audit request of HCD for the RHNA numbers is ongoing! Please send in your feedback to the audit team on the blatant inflation of the RHNA numbers. You can submit your email supporting the audit to Monica Toschi. If you do, please ask her to forward the email to Auditors Tilden, Lozano and Fischer. If you don't have email, you can also print it.NOTE: Find the facts on housing here. We highly recommend that you spend 5 minutes reading and educating yourself with the facts.
Mike Tilden, Acting State Auditor
Tammy Lozano, Principal Auditor
Office of the California State Auditor
621 Capitol Mall, Suite 1200
Sacramento, CA 95814
Dear Mr. Tilden and Mrs. Lozano,
I am writing to provide my perspective in relation to the audit commissioned by the Joint Legislative Audit Committee at the request of Members - State Senator Glazer, State Senator Newman, Assemblymember Bauer-Kahan, State Senator Portantino, Assemblymember Muratsuchi, State Senator Stern, and State Senator Bates.
Thank you for conducting the audit of the California Department of Housing and Community Development's (HCD) Regional Housing Needs Allocation (RHNA*) number. HCD failed to adequately consider information submitted in the Local Jurisdiction Survey regarding RHNA Factors, including the exodus - California has shrunk in population - existing and projected jobs and housing relationship, availability of land suitable for urban development or for conversion to residential use; and the region’s greenhouse gas emissions targets to be met. Silicon Valley lost 40,000 residents in 2021, the largest exodus since the dot-com bust, driven in part by a steep drop in migration into the area, Only 5,560 people moved to Silicon Valley in 2021, nearly three times less than the year before, and a 72% decline from 2019. That big drop in people moving in was greater than the 70% increase in people moving out of the valley from 2019 to 2021.
To state the obvious, our elected leaders have failed to develop a proper urban plan to fix the underlying issues with insane pieces of legislation that would NEVER pass the litmus test in the corporate world. There is always an alternate approach: Solve the transit problem and you have essentially fixed the housing problem. Visit the position statement at reference link #1 below. California needs to make bold moves now - if we had not dreamt big, we would still be taking a ferry from San Francisco to Marin County. Much of the issues are beyond HCD and systemic. But HCD has been entrusted to take charge unfortunately.
Turning over our state to land developers: HCD’s 2022 RHNA housing numbers are exponentially higher than what has been allocated in the past - thanks to SB-828. As a result, high-density housing sites are being proposed in every city. Many cities and communities are reeling under this housing pressure and are fearful of its impacts that will be felt for decades to come. The land developers will make a fortune and our cities will cease to be what they are today. It is an environmental disaster. As you know, The California State Auditor’s Office has already criticized the state’s efforts to address the affordable housing crisis, including lacking a clear plan and wasting $2.7 billion in bond money. Do we expect this new plan to work?
An ill-conceived push for housing: Sacramento’s housing policy is relying on supply and demand to create more housing in the hope of driving prices down - but that has never worked anywhere based on the reference link #2 below. Are developers interested in dropping the price of housing? Aspersions are made related to racism and housing practices are often disadvantageous to low income communities. In reality, “solving racism” is a great excuse to add housing, but those too will be mostly for the rich. The legislative bills from Sacramento like SB-9 and SB-10 are also pushing high-density housing all over California - and there are more coming. Based on the push that is coming from Sacramento, there is only one assurance - that there is none! All bets are off, and every commercial or residential property can be in scope for development! Sacramento's approach has failed to adequately address the creation of more affordable housing or fix the systemic challenges that have led to today’s exodus from California.
The system has been rigged for failure: The Housing Element’s inflated* Housing goals, i.e RHNA numbers, has been rigged for cities to fail and for developers to make money - as explained in reference #3. Yes, setup for failure thanks to politicians who have sold out to the real-estate industry as the op-ed points out. Once a city fails to attain their RHNA numbers, SB-35 is triggered; essentially triggered by developers failing to pull building permits. If building permits are not pulled, cities are blamed. But a city government is not in the business of building housing as we all know. The city hands out permits and mostly cities do not like to reject permit requests. If developers don’t pull permits, then developers circumvent the city council (as per the definition of SB-35) and go through a ministerial approval a.k.a rubber-stamping approval without public hearing. The developers get a free rein over the city. Do you see what is happening here? RHNA calculations are not meant to be scientific and accurate; it is geared to ensure that its corporate members make money. The inflated housing goals in SB 828 have set cities up for failure and for developers to rake it in!
Accelerating climate change: These bills are an environmental disaster and a gift for developers; instead of creating trickle-down equitable and affordable housing, they will disrupt our protected open space by allowing developers to circumvent the Environmental Impact Review (EIR). Front yards and backyards will be lost and permeable surfaces that replenish groundwater will disappear with the footprint of structures taking up the space. If we add housing, and if our commute time to jobs - just a few miles - becomes hours, how are we reducing the greenhouse gas, given that traffic is the primary reason for the climate crisis?
California’s water challenge: Santa Clara Valley Water recently declared a water shortage emergency and instituted a mandatory 15% reduction in water use compared to 2019. Vegetation in our fire risk areas is extraordinarily dry and many of us fear what this and future fire seasons will look like, as it has become clear that drought conditions may be the new normal. As reported in the San Jose Mercury News, a recent study of this year’s runoff from the Sierra Mountains indicates that due to climate change, past hydrology models are no longer reliable. Many counties are also extremely sensitive to drought conditions locally as well as elsewhere in the State. The Draft EIR for Plan Bay Area 2050 states that even after mitigation measures are implemented, water supplies will be insufficient to support the Bay Area’s projected population increases.
A tax increase for the infrastructure: The push for housing without an infrastructure plan will impose inordinate pressure upon every city to increase taxes to fund the infrastructure gap. Therefore, city governments will be tremendously pressured to raise taxes once the build-out (and up) of your city occurs over the next few years. Our plan should protect communities from increasing taxes, and protect property value by favoring housing on the foundation of an infrastructure plan that keeps the environmental impact, traffic, schools, roads, water, and sewers in consideration. An infrastructure tax increase should not fall upon the citizens as an afterthought “surprise, surprise.” If we solve the transit problem, we will solve the housing problem - this is how cities like Tokyo and Singapore have approached the housing crisis successfully.
Dark money is influencing bad decisions: We should stand firm against dark money’s influence on the political system and call out elected leaders who are selling out to special interest groups, such as real estate developers. Housing Is A Human Right has released a special report about a housing proponent politician’s troubling financial connections to the real estate industry. It reveals that this politician— who aggressively pushes a controversial “trickle-down” housing agenda that fuels gentrification — has long relied on vast amounts of campaign cash from developers and other real estate insiders to win elections and stay in power. These bills can generate billions for the politician’s political patrons.
The RHNA determination model: HCD's RHNA determination has been independently found to be in error and the audit should consider arguments by other regional agencies such as the Southern California Association of Governments. Moreover, there remain significant unanswered questions related to the data analysis in PBA50. Many agencies have consistently requested jurisdiction-level data to better understand the assumptions, analysis and conclusions that make up PBA50. Cities and counties within the Bay Area are being burdened with excessively high RHNA numbers – even without potential double counting errors from HCD. The RHNA methodology should address development feasibility for jurisdictions by including an allocation cap, especially under current circumstances where it will take time for developers to prepare housing project plans and funding packages in recession conditions. The concern is some jurisdictions potentially failing to meet their market rate housing targets, subsequently being subject to the permit streamlining requirements of SB 35, and then these jurisdictions losing control over local land use decisions four years into the RHNA cycle. Regional Growth Strategies Mapping and Modeling Accuracy. Mapping, modeling results, and associated assessments of development potential underlie the regional growth pattern in the Plan Bay Area 2050 Final Blueprint. Accuracy in the regional growth strategies mapping and modeling is fundamental if 2050 Households is used as the RHNA methodology baseline.
Reduce the number of jobs attributed to jurisdictions with employers in sectors with high telecommuting rates. Telecommuting may be a long-term social and employment impact of COVID-19. Many businesses and institutions are, out of necessity, finding ways to shift operations to completely or mostly remote operations. Many large employers have shifted to remote operations. Once the pandemic subsides, many employers may continue a remote portion of their operations. The potential is very real that telecommuting could represent a larger share of jobs than is currently modeled, and thus a reduction in the number of commuters and a shift in where jobs are located. For example, many cities anticipate retention of telecommuting for many employees with jobs and the possibility of associated lower demand for housing within and nearby. MTC/ABAG staff indicated that the Final Blueprint strategy EN7 accounts for significantly more telecommuting, as well as more use of transit and active transportation modes. However, the strategy still appears to attribute jobs to headquarters, assuming employees come to the office some days a week. We have to consider a reasonable percentage of telecommuting-friendly sector jobs to be reassigned away from job headquarters, as well as to make a stronger push to model telecommuting in employment dynamics beyond an assumption ranging between 17% and 25% of the workforce for some jurisdictions.
COVID-19 Pandemic and Recession. The impacts of the COVID-19 pandemic —including the economic recession, anticipated changes in commute patterns, and other impacts—must be aggressively and clearly incorporated into the Final Blueprint documents, Implementation Plan, Environmental Impact Report (EIR) and overall final Plan Bay Area 2050. The COVID-19 pandemic created an economic recession that has and will continue to severely impact local governments, regional transportation systems, job growth, population growth and migration, and all development—from commercial to residential for multiple years well beyond 2021). The crisis is ongoing, and so the true recovery has yet to begin. This crisis must be explicitly studied, modeled, and discussed. The modeling and analyzed impacts must be a prominent, articulated part of the Final Blueprint documents presented to MTC and the ABAG Executive Board, as well as the Implementation Plan, EIR, and ultimately the final Plan Bay Area 2050. While the plan’s time horizon is long, the impacts of the pandemic and recession are also long; no doubt the pandemic and recovery will shape the next generation. Responsible planning must clearly and easily show how the pandemic is accounted for year by year, especially in terms of job growth, population growth, housing demand, and anticipated viability of various funding streams in Plan Bay Area 2050.
Thoroughly understanding the COVID-19 pandemic and recession modeling in the Final Blueprint will help jurisdictions better understand 1) how the planning horizon in the Plan Bay Area 2050 Final Blueprint translates into the 8-year RHNA planning horizon and 2) anticipate potential timing for jurisdiction partnership in achieving stated greenhouse gas emissions reduction targets and other goals in Plan Bay Area 2050. We have been unable to find a clear single source of COVID-19 pandemic and recession modeling information. COVID-19 pandemic and recession impacts are anticipated to last from approximately two years to ten years, depending on the topic. For example, transportation strategies that assist in recovering transit ridership to pre-pandemic levels are front-loaded for implementation. The visionary housing goals in Plan Bay Area 2050 still rely on new funding sources, some of which require voter approval, political compromises, and infrastructure that has not yet been funded, approved, or built.
With the unanticipated intrusion of COVID-19 early this year and all that has come with this pandemic, the seriousness and depth of its implications to the overall RHNA process needs to be fully considered. It is important to understand how ABAG accounted for development feasibility for the current eight-year RHNA cycle under recession conditions. Additionally, it remains unclear when new funding sources described in the Plan Bay Area 2050 Final Blueprint for housing retention and production would arrive in this recession and if they would be in effect in time to assist jurisdictions meet the RHNA allocations for the current eight-year RHNA cycle. More can be done in the RHNA methodology to account for current and future improvements in the existing jobs/housing imbalances in the region due to the current success of remote work and telecommuting. The fundamental location attribution for the jobs related RHNA methodology factors should be recalibrated for jurisdictions across the region. The pre-pandemic and pre-recession scoring used does not account for outmigration of jobs from the Bay Area and the anticipated increased levels of telecommuting in post-pandemic and post‐recession conditions.
In conclusion: You have been entrusted a very important responsibility. The HCD numbers are flawed, and it is time to correct the course. Let us do the right thing to build a plan for California’s future on the basis of an excellent data model, the aspirations of the people of California and to ensure the future sustainability of our state. Let us not accelerate the exodus from our Golden State. Do not take this audit lightly please.
*Regional Housing Needs Allocation
Since 1969, California has required that all local governments (cities and counties) adequately plan to meet the housing needs of everyone in the community. California’s local governments meet this requirement by adopting housing plans as part of their “general plan” (also required by the state). General plans serve as the local government’s "blueprint" for how the city and/or county will grow and develop and include seven elements: land use, transportation, conservation, noise, open space, safety, and housing. In order to create a housing plan (aka housing element) showing it could meet the local housing needs, a jurisdiction must first know how much housing it must plan for (and estimate how much will be needed at a variety of affordability levels in order to match the needs of the people who will live there). This is determined by a process called the regional housing needs assessment.