AGENDA REPORT
Meeting Date: May 21, 2024
Item Number:
To: Honorable Mayor and City Council
From: Cynthia Owens, Municipal Affairs Program Manager
Subject: RATIFICATION OF A LETTER OF OPPOSITION SENT BY CITY MANAGER NANCY HUNT-COFFEY ON SENATE BILL 1037
(WIENER) PLANNING AND ZONING: HOUSING ELEMENT:
ENFORCEMENT
RECOMMENDATION
Staff recommends the City Council ratify the action taken by City Manager Nancy HuntCoffey to send a letter of opposition for Senate Bill 1037 (Wiener) Planning and Zoning:
Housing Element: Enforcement (“SB 1037”) at the direction of Mayor Lester J. Friedman (Attachment 1).
INTRODUCTION
On May 9, the League of California Cities sent an email to Mayors, City Councilmembers and City Managers requesting cities send letters of opposition to SB 1037, which allows the State Attorney General to take legal action against a city and seek fines up to $50,000 a month for violating unspecified state housing laws that require ministerial approval of certain housing projects or for failing to adopt a housing element that substantially complies with the law, even if the jurisdiction is acting in good faith.
As the bill was scheduled for a vote in the State Senate Appropriations Committee on May 13, the City needed to act quickly to express our opposition. In accordance with the City Council Policy & Operations Manual, the Mayor directed the City Manager to send a letter of opposition as the City has no formal position related specifically to the content of SB 1037 in the City’s Legislative Platform. Staff is requesting the City Council to ratify the letter sent by City Manager Nancy Hunt-Coffey at the direction of the Mayor. .
Attachments: 1. Letter of Opposition – SB 1037
2. SB 1037 Bill Text
Meeting Date: May 21, 2024
DISCUSSION
SB 1037 was introduced by Senator Scott Wiener and sponsored by State Attorney General Rob Bonta. This bill would enhance the State Attorney General’s ability to seek civil penalties in court against local governments that violate state housing law.
Currently, when a court finds a locality in violation of state housing law, monetary penalties can only be imposed 60 days, or in some cases up to a year, after a court has ordered compliance. According to Senator Weiner and State Attorney General, local governments have no real incentive to follow the law since they can wait for the state to sue them and then lose in court to only then remedy their violation to avoid penalties.
Under the State’s Housing Element Law, every city and county in California must periodically update its housing plan to meet its share of the regional and statewide housing needs. SB 1037 applies to local governments that refuse to adopt a compliant housing element and/or violate a ministerial approval law. If enacted, SB 1037:
1) Requires specific penalties be imposed in any action brought by the State Attorney General on behalf of the California Department of Housing and Community Development (“HCD”) or in an independent capacity to enforce any state law that requires a local government to ministerially approve, without discretionary review, any land use decision or permitting application for a housing development project, including all of the following:
a. A civil penalty of $10,000 per month, not to exceed $50,000 per month, for each violation accrued from the date of the order or judgement finding a violation until the date the violation is cured.
b. All costs of investigating and prosecuting this action, including expert fees, reasonable attorney’s fees, and costs, whenever the State Attorney General prevails.
c. Other relief as the court deems appropriate, including equitable and injunctive relief, provisional, or otherwise.
2) Ensures that, where local land use decisions or actions are arbitrary, capricious, entirely lacking in evidentiary support, contrary to established public policy, unlawful, or procedurally unfair, adequate remedies are available to ensure that state laws are followed.
3) Requires any fine levied shall be deposited in the Building Homes and Jobs Fund for the purpose of supporting the development of affordable housing located in the affected jurisdiction. If the funds are not used within five years, the penalty funds shall revert to financing newly constructed affordable housing units in the state without any geographic restrictions.
4) Provides the liability, penalties, and remedies imposed by this bill are in addition to any other liability, penalty, or remedy imposed by any other law.
As the legislative matters contained in SB 1037 are not specifically addressed in the City’s Legislative Platform, and the League of California Cities was requesting cities to send letters of opposition prior to the State Senate Appropriation Committee Hearing on Mary 13, 2024, the Mayor directed the City Manager on May 10, 2024 to send a letter of opposition.
Meeting Date: May 21, 2024
Staff is now requesting the City Council ratify the action taken by the City Manager at the direction of the Mayor to send a letter of support for SB 1037, as required by the City Council Policy & Operations Manual.
FISCAL IMPACT
The fiscal impact is unknown as, should this bill become law, the City could potentially face fines in the future if a certified housing element is not in place by state established deadlines or for violating unspecified state housing laws that require ministerial approval of certain housing projects.
Keith Sterling,
Deputy City Manager
Approved By
Attachment 1
Nancy HuntCoffey LY
May 10, 2024
The Honorable Scott WienerSenator, 11th District
1021 0 Street, Suite 8620
Sacramento, CA 95814
RE: SB 1037 (Wiener) Planning and zoning: housing element: enforcement City of Beverly Hills OPPOSE
Dear Senator Wiener:
I write to inform you that the City of Beverly Hills must respectfully OPPOSE SB 1037, yourmeasure to allow the Attorney General to take legal action against a city and seek fines of between $10,000 and $50,000 per month for failure to adopt a compliant housing element or if the city does not follow state laws that require ministerial approval of certain housing projects.
Under existing law, cities can be subject to significant fines and penalties for violating certain housing laws. However, before fines are imposed, a city has the ability to correct the action.Additionally, enhanced fines are not imposed unless the city fails to follow a court’s order or acts in bad faith.
Over the last several years, the Legislature has enacted several new housing laws in rapidsuccession, with seemingly little time for local governments to adjust their local processes toincorporate these new rules before new laws are enacted, year over year. The state should work in partnership with local government to help update their local operations to meet their fair share ofthe regional and statewide housing needs, and use quick and clear processes to make decisions about housing proposals in accordance with those plans and state law.
SB 1037 has been recently amended (on April 25, 2024) to specify that the bill’s proposed fines and penalties would only apply when local land use decisions or actions are arbitrary, capricious, entirely lacking in evidentiary support, contrary to established public policy, unlawful, or procedurally unfair. While this is an improvement, it is not clear more penalties are needed to drive toward the state’s ultimate goal which is to produce more housing.
City ofBeverly Hills 455 N. Rexford Drive Beverly Hills, California 90210 t(310)285-1014f(310)275-8159 BeverlyHills.org Instead of creating new fines and penalties, lawmakers and the Department of Housing and Community Development (HCD) should provide cities with clear guidance and technicalassistance to help them finalize their housing elements and put those plans to work so muchneeded housing construction can occur. Many jurisdictions submitted updated housing elements on time to HCD; however, the review process was inconsistent from HCD. The process forcompliance should focus on providing broad support and technical assistance with each staff member providing the same direction and guidance. By providing information up front and working in step with cities, then housing elements can be passed in a timely manner that meets state law.For these reasons, we must respectfully oppose SB 1037.
Sincerely,
12a C’71’Zf,i
Nancy Hunt-Coffey ô’City Managercc: Senators and Consultants, Senate Appropriations Committee The Honorable Ben Allen, Senator, 24th District
The Honorable Rick Zbur, Assemblymember, 51st DistrictAndrew K. Antwih, Shaw Yoder Antwih Schmelzer & Lange Attachment 2
AMENDED IN SENATE APRIL 25, 2024
AMENDED IN SENATE MARCH 19, 2024
SENATE BILL No. 1037
Introduced by Senator Wiener
February 6, 2024
An act to add Section 65009.1 to the Government Code, relating to housing.
legislative counsel’s digest
SB 1037, as amended, Wiener. Planning and zoning: housing element:
enforcement.
Existing law, the Planning and Zoning Law, requires a city or county to adopt a general plan for land use development within its boundaries that includes, among other things, a housing element. The Planning and Zoning Law requires the Department of Housing and Community Development (HCD) to determine whether the housing element is in substantial compliance with specified provisions of that law. The Planning and Zoning Law requires HCD to notify a city, county, or city and county, and authorizes HCD to notify the office of the Attorney General, that the city, county, or city and county is in violation of state law if the local government has taken action in violation of specified provisions of law. The Planning and Zoning Law also requires, among other things, that an application for a housing development be subject to a specified streamlined, ministerial approval process if the development satisfies certain objective planning standards.
This bill, in any action brought by the Attorney General, on behalf of HCD or in an independent capacity, to enforce the adoption of housing element revisions, as specified, or to enforce any state law that requires a city, county, or local agency to ministerially approve any
97 land use decision or permitting application for a housing development project, as specified, would subject the city, county, or local agency to specified remedies, including a civil penalty of, at minimum, $10,000 per month, and not exceeding $50,000 per month, for each violation, as specified. The bill would require that the penalties set forth in its provisions only apply when local land use decisions or actions are arbitrary, capricious, entirely lacking in evidentiary support, contrary to established public policy, unlawful, or procedurally unfair. The bill would require these civil penalties, as specified, to be deposited into the Building Homes and Jobs Trust Fund for the sole purpose of supporting the development of affordable housing located in the affected jurisdiction, except as provided, and would require that expenditure of any penalty moneys deposited into the fund under these provisions be subject to appropriation by the Legislature. In the event a city, county, or local agency fails to pay civil penalties imposed by the court, the bill would authorize the court to require the Controller to intercept any available state and local funds and direct those funds to the Building Homes and Jobs Trust Fund to correct the jurisdiction’s failure to pay, as specified.
The bill would make a related statement of legislative findings and declarations.
The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
The people of the State of California do enact as follows:
line 1 SECTION 1. The Legislature finds and declares all of the line 2 following:
line 3 (a) California has a statewide housing shortage crisis. line 4 (b) California’s housing crisis stifles economic growth, line 5 contributes to the homelessness epidemic, consumes an line 6 ever-growing share of the paychecks of working families, and line 7 holds millions of households back from realizing the California line 8 dream of achieving housing security or home ownership. line 9 Conversely, new construction of residences, particularly line 10 multifamily homes, induces a chain of moves, ultimately adding 97 SB 1037 — 2 —
line 1 more housing units affordable to middle- and low-income line 2 households.
line 3 (c) Restrictive zoning, land use planning, and burdensome line 4 residential permitting practices and policies, at the local level in line 5 particular, are a major cause of the shortfall between California’s line 6 housing needs and the available supply of housing. For example, line 7 despite the obligations of local governments under the Housing line 8 Element Law to update their general plans, including required line 9 rezoning for additional sites to address projected housing needs, line 10 numerous cities and counties continue to delay and, at times even line 11 refuse, to undertake required actions to encourage, promote, and line 12 facilitate the development of housing to accommodate the line 13 established regional housing need. The absence of updated housing line 14 elements that are substantially compliant with state law causes line 15 unnecessary uncertainty and delay in approving housing line 16 development applications. This cumulative delay causes many line 17 local governments to continue to fall behind in meeting their share line 18 of regional housing need.
line 19 (d) These restrictive practices and policies continue to persist line 20 despite other statewide reforms to expedite, streamline, and line 21 ministerially approve the planning and construction of housing of line 22 all types, including housing affordable to persons and families of line 23 lower income. While not exhaustive, these reforms can be found line 24 in the following provisions:
line 25 (1) Accessory dwelling units, as described in Sections 65852.150 line 26 and 65852.2 of the Government Code.
line 27 (2) By-right housing, in which certain multifamily housing is line 28 designated a permitted use, as described in Section 65589.4 of the line 29 Government Code.
line 30 (3) Reduced time for action on affordable housing applications line 31 under the approval of the development permits process, as line 32 described in Article 5 (commencing with Section 65950) of Chapter line 33 4.5 of Division 1 of Title 7 of the Government Code. line 34 (4) Streamlining housing approvals during a housing shortage, line 35 as described in Section 65913.4 of the Government Code. line 36 (5) Streamlining agricultural employee housing development line 37 approvals, as described in Section 17021.8 of the Health and Safety line 38 Code.
line 39 (6) The Housing Crisis Act of 2019, as described in Chapter line 40 654 of the Statutes of 2019 (Senate Bill 330).
97 — 3 — SB 1037
line 1 (7) Allowing four units to be built on single-family parcels line 2 statewide, as described in Chapter 162 of the Statutes of 2021 line 3 (Senate Bill 9).
line 4 (8) The Middle Class Housing Act of 2022, as described in line 5 Section 65852.24 of the Government Code.
line 6 (9) The Affordable Housing and High Road Jobs Act of 2022, line 7 as described in Chapter 4.1 (commencing with Section 65912.100) line 8 of Division 1 of Title 7 of the Government Code. line 9 (10) Housing element law requirements and required rezoning line 10 to address unmet housing needs, as described in Chapter 974 of line 11 the Statutes of 2018 (Senate Bill 828) and Chapter 358 of the line 12 Statutes of 2021 (Assembly Bill 1398).
line 13 SEC. 2. Section 65009.1 is added to the Government Code, to line 14 read:
line 15 65009.1. (a) In any action brought by the Attorney General, line 16 on behalf of the Department of Housing and Community line 17 Development or in an independent capacity, to enforce the adoption line 18 of housing element revisions pursuant to the schedule set forth in line 19 subdivision (e) of Section 65588, or to enforce any state law that line 20 requires a city, county, or local agency to ministerially approve, line 21 without discretionary review, any land use decision or permitting line 22 application for a housing development project, the city, county, line 23 or local agency shall be subject to the following remedies:
line 24 (1) A civil penalty of, at minimum, ten thousand dollars line 25 ($10,000) per month, and not exceeding fifty thousand dollars line 26 ($50,000) per month, for each violation, accrued from the date of line 27 the violation until the date the violation is cured. line 28 (2) (A) All costs of investigating and prosecuting this action, line 29 including expert fees, reasonable attorney’s fees, and costs, line 30 whenever the Attorney General prevails in a civil action to enforce line 31 any state laws under this section.
line 32 (B) Awards imposed pursuant to this paragraph shall be paid line 33 to the Public Rights Law Enforcement Special Fund established line 34 by Section 12530.
line 35 (3) (A) Other relief as the court deems appropriate, including line 36 equitable and injunctive relief, provisional or otherwise. line 37 (B) Any injunction, provisional or otherwise, ordered by the line 38 court pursuant to this paragraph shall be deemed to be prohibitory, line 39 and not affirmative.
97 SB 1037 — 4 —
line 1 (b) The purpose of this section is to ensure that, where penalties line 2 set forth in this section shall only apply when local land use line 3 decisions or actions are arbitrary, capricious, entirely lacking in line 4 evidentiary support, contrary to established public policy, unlawful, line 5 or procedurally unfair, unfair. The purpose of this section is to line 6 ensure adequate remedies are available to ensure that state laws line 7 mandating streamlined, ministerial approvals related to housing line 8 development projects, and the timely adoption of housing element line 9 revisions, are promptly and faithfully followed. line 10 (c) (1) Any civil penalty levied pursuant to this section shall line 11 be deposited into the Building Homes and Jobs Trust Fund for the line 12 sole purpose of supporting the development of affordable housing line 13 located in the affected jurisdiction. Expenditure of any penalty line 14 moneys deposited into the Building Homes and Jobs Trust Fund line 15 pursuant to this subdivision shall be subject to appropriation by line 16 the Legislature.
line 17 (2) Any penalty imposed pursuant to this section shall not be line 18 paid out of funds already dedicated to affordable housing, line 19 including, but not limited to, very low, low-, and moderate-income line 20 households.
line 21 (3) To the extent permitted under the California Constitution, line 22 in the event a city, county, or local agency fails to pay civil line 23 penalties imposed by the court, the court may require the Controller line 24 to intercept any available state and local funds and direct those line 25 funds to the Building Homes and Jobs Trust Fund to correct the line 26 jurisdiction’s failure to pay.
line 27 (4) Notwithstanding paragraph (1), if the penalty moneys have line 28 not been expended five years after deposit, the penalty moneys line 29 may be used, upon appropriation, to finance newly constructed line 30 affordable housing units in the state without any geographic line 31 restrictions.
line 32 (d) The liability, penalties, and remedies imposed by this section line 33 are in addition to any other liability, penalties, and remedies line 34 imposed by any other law.
line 35 SEC. 3. The Legislature finds and declares that the lack of line 36 housing is a matter of statewide concern and is not a municipal line 37 affair as that term is used in Section 5 of Article XI of the line 38 California Constitution. Therefore, the Legislature clarifies that 97 — 5 — SB 1037
line 1 Section 2 of this act adding Section 65009.1 to the Government line 2 Code applies to all cities, including charter cities.
O
97 SB 1037 — 6 —