Changes must be made to housing needs allocation

California's most respected watchdog, the state auditing department, recently examined the Department of Housing and Community Development because of questions raised about how the Regional Housing Needs Assessment numbers were calculated.

In the March report, auditors said “HCD does not ensure that its needs assessments are accurate and adequately supported.” That's a big deal.

In other words, the housing department's top-down mandates for the next eight-year housing element cycle are unreliable, likely invalid and should therefore be unenforceable. The foundation of the RHNA methodology is as unstable as building housing on sand.

Left unchallenged, the shoddy work at the housing department foreshadows shoddy housing practices that reflect the state's embarrassing failure to meet the need for housing that is affordable for very low and lowincome residents, while density drives up home and rent prices and homelessness grows.

The housing department's questionable methods were noted in 2020 when the Embarcadero Institute's lead researcher, Gab Layton, sounded the alarm about “double counting” of unit needs, which created inflated, unrealistic and unreachable numbers.

Some local officials say the state is holding a gun to their heads with inflated RHNA numbers. They need to demonstrate a good-faith effort to meet the state's unfounded demands. If they don't, their jurisdictions risk hefty fines, lost funding, litigation or state takeover.

But the public and non-governmental agencies can and must boldly challenge the legislative mandates that don't pass the auditor's sniff test. It's not the time to lament that there's nothing we can do. We must demand our legislators support the auditor's recommendations.

What are the recommendations? The auditor's report gives the housing department a timeline between June 2022 and February 2023 to review their data, establish formal review procedures, review the comparison regions and conduct an analysis of healthy vacancy rates. The Department of Finance must review its population projections based on 2020 census data and review its assumptions about household formation rates.

Jurisdictions across the state are lining up to explore legal options, including challenges to State Bill 9 and the audit. There is power in numbers. Encourage your city attorney to contact Pam Lee at plee@awattorneys. com. In addition, email members of the Assembly and Senate housing committees and your local reps. Copy it to the Marin Board of Supervisors and your city council, as well as traditional and social media outlets.

Remind legislators of the California Administrative Procedure Act. It allows the public to participate in the adoption of state regulations to ensure that the regulations are clear, necessary, and legally valid.

The basic message to legislators is to fix the RHNA problem. They must stop barreling ahead with new legislation based on allocations as if the audit is no big deal. In 2022, there are dozens of new bills, building on the shifting sands of unreliable RHNA numbers. Additionally, legislators should make the following demands of the housing department:

• Show the work. Bring together representatives from all committees, departments, leagues, institutes and the public for a facilitated discussion.

• If a review discloses double-counting, then acknowledge overcounting and correct the mistakes. Housing is often called “a crisis,” but the bigger crisis is not correcting mistakes.

• Secure a state commitment to fund and build 100% very low- and low-income subsidized housing. Let the market take care of market-rate demands.

• Create regulation to protect against speculating investors who make cash offers that consolidate single-family homes into Wall Street portfolios, reduce homeownership, increase corporate rentals and destabilize communities.

• Adjust the eighth RHNA cycle and collaborate with jurisdictions on new housing allocations.

The California Alliance of Elected Officials gets the credit for initiating the audit.

“Unless HCD and the Department of Finance complete this work and correct their mistakes, there is no justification for punishing cities for failing to meet erroneous RHNA goals,” said alliance founder and Pleasanton Councilmember Julie Testa. “The Legislature should suspend implementation of RHNA until the public is satisfied these problems have been resolved.”

Take a bold stand. It's a big deal. Our future depends on it.