There is no question that California’s Regional Housing Needs Assessment (RHNA) process has failed to live up to its stated purpose, as most jurisdictions have continued to fail to meet their housing goals and those that do perform well often do so because there’s a relatively low bar of success.
While the housing legislation package of 2017 may help improve RHNA data accountability and transparency, more enforcement mechanisms may be necessary to meet existing goals, along with a comprehensive assessment to ensure it is not guaranteeing a continued shortage by setting goals according to the status quo, in which soaring costs and homelessness are on the rise.
Gov. Newsom has signaled a desire to reassess the housing goals, and build in a stronger enforcement mechanism of denying transportation funds to jurisdictions that aren’t meeting their goals. On Jan. 25, the Governor’s office announced that the state of California was taking legal action against Huntington Beach for “standing in the way of affordable housing production and refusing to meet regional housing needs”—a move that could set precedent for greater enforcement of RHNA goals in other areas of the state.
The ongoing housing crisis in California requires legislative action. The state must have a robust set of production goals as a precondition of meeting the state’s housing challenges. While the analysis in this paper could not address all underlying challenges to the state’s inability to adequately address the housing crisis–including the need for better financing mechanisms to help jurisdictions meet lower income goals– it does indicate that the Regional Housing Needs Allocation process is indeed “broken”: in its current form, it is not a meaningful benchmark to help solve housing challenges in the state.
California Takes Action to Hold Cities Accountable for Standing in the Way of New Housing. Published January 25, 2019.
In November 2018, voters did approve $6 billion through Proposition 1 and Proposition 2 to be made available for affordable housing. Currently, HCD determines the regional housing needs assessment for each COG by utilizing population forecasts from the California Department of Finance. Estimates of household formation determines future
household estimates, which provides the foundation of RHNA allocation. The state needs housing goals that help address housing demand rather than simply defining “housing needs” as maintaining pace with projected household growth.
Redefine housing needs
Projected household growth is the backbone of RHNA methodology. While COGs each have unique methodologies for distributing housing units across member jurisdictions, population and demographic forecasts produced by local COGs must be consistent with those produced by the DOF. The annual household growth projections in the state have been consistently falling over time in large part because of falling headship rates among younger age cohorts in California.
The use of household growth forecasts as a benchmark for housing policy has become a vicious self-reinforcing process. The declining household formation rates help determine future household estimates, which provides the foundation of RHNA targets, but fail to account for the impact California’s housing shortage has had on household formation rates. Many Californians have opted or had to share housing due to the state’s high cost of living—resulting in a reduction of new households formed.
By relying on past trends in household formation, the current housing needs assessment fails to capture the extent of housing demand in the state. If state housing policy is going to utilize RHNA progress as a benchmark, housing needs calculations should be reexamined in order to better account for historic unmet housing needs and distribute allocations equitably across a region. State and local officials need a more accurate understanding of actual state-wide housing needs to benchmark policy and performance against, and there could be value utilizing housing market metrics (rents, vacancy rates, etc.) to account for unmet demand. Zone for existing demand
For many jurisdictions, the fundamental obstacles to achieving the necessary housing goals include land use regulations that favor single-family homes and local opposition. Gov. Newsom’s proposal that calls for a more centralized approach could just be what the state sorely needs. For many people unable to secure housing before housing costs skyrocketed, HCD taking a more active role in longer-term strategy through housing element reviewing housing elements and, overseeing and enforcing regional housing goals and productions might be what is needed to fix the current RHNA allocation process and make progress toward alleviating the housing crisis. Do Communities Adequately Plan for Housing?
Recent analysis from the Legislative Analyst’s Office further underscores the ongoing disconnect between where housing elements envision growth and where it is actually able to take place. Local zoning rules that favor single-family units over multi-family continue to impede progress toward allowing communities to meet their housing needs. Until local communities can make it legal to build and prioritize development of residential housing for all income types, we will only continue to exacerbate our existing housing crisis. Local control often misses the forest for the trees
The state actively allows local jurisdictions to plan for unsustainable growth. Throughout planning documents at all of the COGs, there are jurisdictions forecasted to add jobs but not housing, further exacerbating the jobs to housing ratio locally and pushing workers farther from their place of employment. As noted in this brief, SCAG’s 2012-2035 RTP forecast Beverly Hills to add 3,400 jobs between 2008 and 2020 and only 900 residents.
The most recent projections in the 2020 RTP allow planning to move forward with the same jobs/housing imbalance—Beverly Hills is forecasted to add 4,011 jobs from 2016-2035 yet only add 969 households. Those additional workers must live somewhere and it will probably fall upon neighboring jurisdictions to provide housing, because if history is any guide, the RHNA unit allocation for Beverly Hills will not come close to addressing the needs anticipated in the job growth projections.
Local elected leaders often have concerns and local incentives that may be rational within the confines of their jurisdictions, but when taken together across the state, result in problematic macro-economic outcomes and only exacerbate the state’s dire housing crisis. It’s time for a statewide solution, and the existing RHNA is not that solution.