CITY OF GROVER BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No. 11
Placement: Business
Meeting Date: September 14, 2026
TO: Honorable Mayor and City Council
FROM: Matthew Bronson, City Manager
PREPARED BY: Megan Martin, Community Development Director SUBJECT: Presentation on San Luis Obispo Council of Governments Regional Housing Needs Allocation Plan
RECOMMENDATION
Receive a presentation by the San Luis Obispo Council of Governments (SLOCOG) on the San Luis Obispo County Regional Housing Needs Allocation Plan and provide input to SLOCOG and City staff.
BACKGROUND
At the direction of the City Council at the June 8, 2026, meeting, staff invited representatives from the San Luis Obispo Council of Governments (SLOCOG) to provide an overview of the Regional Housing Needs Allocation (RHNA) process and its role in the preparation of the City’s Housing Element update. SLOCOG is the regional Council of Governments for San Luis Obispo County and serves as a regional planning and transportation agency. SLOCOG coordinates the county’s regional RHNA process, which establishes the overall housing need for the region and ultimately informs each jurisdiction’s housing planning requirements. As part of the RHNA process, the State first determines the overall housing need for the region using a methodology established by the California Department of Housing and Community Development (HCD). That regional allocation is then distributed among the jurisdictions within the region by SLOCOG based on factors established through the RHNA methodology.
For the upcoming 7th Cycle Housing Element Update (7th Cycle) covering 2028-2036, the State originally identified a regional need of 15,284 units which SLOCOG objected to on June 3, 2026 as shown in the letter in Attachment 1. SLOCOG’s objection expressed concerns with the State’s methodology, particularly surrounding the cost-burden analysis, and requested the allocation be reduced to 7,023 units based on an updated methodology. At the direction of the Council, staff submitted a letter to the State (shown in Attachment 2) in support of SLOCOG’s concerns and the request to reduce the regional allocation. On July 17, 2026 HCD sent a letter to SLOCOG shown in Attachment 3 that denied SLOCOG’s request and identified 14,577 units as the regional housing need that the County’s jurisdictions must plan for during the 7th Cycle.
The RHNA allocation for the City will be a significant component of the upcoming 7th Cycle Housing Element process which will cover a wide range of policy issues including building heights and commercial spaces. SLOCOG staff will provide Council with an overview of the RHNA process, the State methodology and regional distribution process, and the anticipated timeline and next steps in determining the jurisdictional allocation of the regional housing units. City staff Staff Report: SLOCOG RHNA Presentation Page 2
September 14, 2026
can provide comment on policy or technical issues specific to the City. Staff would also note that an agreement with an outside consultant to lead the upcoming Housing Element Update process is being finalized for the Council’s approval at a future meeting.
FISCAL IMPACT
There are no funding impacts to this staff report.
ALTERNATIVES
The Council has the following alternatives to consider:
1. Receive a presentation by the San Luis Obispo Council of Governments (SLOCOG) on the San Luis Obispo County Regional Housing Needs Allocation Plan and provide input to SLOCOG and City staff; or
2. Provide alternative direction to staff.
PUBLIC NOTIFICATION
The agenda was posted in accordance with the Brown Act.
ATTACHMENTS
1. SLOCOG RHNA Objection Letter
2. City of Grover Beach SLOCOG RHNA Objection Support Letter
3. HCD Objection Response Letter
Multi-Year Goals
☐ Public Safety and Community Services ☒ Economic Development and Housing ☐ Community Infrastructure ☐ Financial and Organization Sustainability Council Priorities
☐ Water & Wastewater Infrastructure ☒ Community Engagement ☐ Street Improvements and Maintenance
Attachment 1
S/\N I u,s ()RISP() r OI JN( II OF (iOVI ��IHrnrs
CONNECTING COMMUNITIES
ARROYO GRANDE ATASCADERO GROVER BEACH
MORRO BAY PASO ROBLES PISMO BEACH
SAN I UIS OBISPO SAN I UIS OBISPO COUNTY
Cost-Burdened Adjustment Multiglier Should Be Ag_glied to the Preliminary Regional Housing Need R.athe Than DOF's Total Occugied Units
As mentioned previously, there have been changes to the number of adjustment factors.
Looking at it on a simple need basis, HCD has calculated that Projected Households (row 4a) subtracting occupied units (row 14) would equate to 2,868 units (115,912 - 113,044 = 2,868 units) as seen in Figure 1. Yet the eleven adjustment factors in HCD's May 15th Determination amount to 81 % of the total determination (12,416 units). We recognize that some of these adjustment factors are required by Government C.ode 65584.01. However, there are more housing unit add-ons than projected need and SLOCOG staff suggests a cap on add-ons if the totals severely outpace the projected need as it currently calculates out (Suggestion 2).
One of the largest add-ons to HCD's current determination is the Cost-Burdened Adjustment accounting for 62% of SLO County's RHNA allocation. SLOCOG staff is aware that this adjustment is required to be compared using national rate due to the change in statute.
However, statute does not dictate the calculation equation.
In Cycle 6, the Cost-Burdened Adjustment was calculated using the difference between the cost-burden rate from a comparable region and the County's rate. This difference was then multiplied by the region's calculated RHNA Cycle 6 need. In the current spreadsheet, the national difference is multiplied by DOF's total occupied units. Since legislation changed, the national rate must be used, but the practice of multiplying the rate difference by the calculated need should stand. SLOCOG staff suggests that HCD maintain the practice of multiplying the rate difference by the calculated need (Suggestion 3). Looking at Figure 1, multiply the preliminary regional housing need (6,512) by the difference (7.85%). If the standard is to use total occupied units every cycle, this becomes an untenable calculation because it does not consider prior development progress by multiplying that factor in perpetuity. If population is projected to decline, a cost burden add-on that outpaces the actual need is unrealistic.
As written in statute, "cost burdened means the share of very low, low-, moderate-, and above moderate-income households that are paying more than 30 percent of household income on housing costs." See Government Code sectLo.n 6 5584.01 (.b)(1 ){H). This definition is exclusive of the 30% not inclusive. As it is calculated, the County's percentage is using ACS tables B25070 and B25091 including the households paying 30% or less. SLOCOG staff suggests using ACS 5-year 2024 Table B25140 which is exclusive of the households paying 30% or less (Suggestion 4). This methodology results in a national average of 30. 71 % and a county average of 38.57%, with a difference of two 7 .85% as seen in Figure 4.
1114 Milrsh Street San Luis Obispo, CA 93401 I t (805) 781-4219 f (805) 781-5703 I [email protected] SLOCOG.ORG
City of Grover Beach
Mayor Kassi Dee Mayor Pro Tem Robert Robert
Council Member Kathy McCorry-Driscoll, Council Member Jules Tuggle, Council Member Clint Weirick Matthew Bronson
City Manager
154 South Eighth Street Grover Beach, California 93433 www.groverbeach.org (805) 473-4550 July 8, 2026
Marissa Prasse
Fair Housing Section Chief
California Department of Housing and Community Development 651 Bannon Street, Suite 400
Sacramento, CA 95811
RE: Support for San Luis Obispo Council of Government’s Objection to the Final RHNA Determination for the San Luis Obispo County 7th Cycle Housing Element Dear Marissa Prasse,
The City of Grover Beach (City) respectfully submits this letter in support of the San Luis Obispo Council of Governments’ (SLOCOG) formal objection letter dated June 3, 2026, to HCD regarding the final RHNA determination for the 7th Cycle Housing Element Update.
The City recognizes California's housing affordability crisis and remains committed to doing its part to facilitate housing production. Over the past several years, Grover Beach has taken significant steps to increase housing opportunities through Housing Element implementation, local development code amendments, permit streamlining, support for accessory dwelling units, and the approval of residential and mixed-use developments along our main commercial corridor. The City remains committed to planning for and accommodating its fair share of housing consistent with State housing law.
At the same time, the Regional Housing Need Assessment process is most effective when it is based on reasonable assumptions, reliable demographic data, and methodologies that accurately reflect regional conditions. Local governments depend on the RHNA process to establish housing planning obligations that are achievable, and most importantly, supported by objective data.
The City agrees with SLOCOG’s objection and that it presents a well-supported alternative methodology consistent with Government Code Section 65584.01(c)(2). Specifically, where the current methodology and determination appear to overstate regional housing needs. Housing allocations should accurately reflect demonstrated need while recognizing actual demographic trends and planned housing growth. Realistic allocations are essential to maintaining public confidence in the RHNA process and ensuring that local planning efforts remain focused on implementing housing solutions that can be successfully delivered.
Attachment 2
The City appreciates HCD’s continued partnership with local governments and shares HCD’s commitment to expanding housing opportunities. We respectfully request that you carefully consider SLOCOG’s objection letter and the proposed alternative methodology during your review of the Final RHNA determination.
Thank you for your consideration.
Respectfully,
Kassi Dee
Mayor
Cc: Peter Rodgers, Executive Director of SLOCOG,
James Worthley, Deputy Executive Director of SLOCOG
STATE OF CALIFORNIA – CALIFORNIA HOUSING AND HOMELESSNESS AGENCY GAVIN NEWSOM, Governor
DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT
DIVISION OF HOUSING POLICY DEVELOPMENT
651 Bannon Street, Ste. 400
Sacramento, CA 95811
(916) 263-2911 / FAX (916) 263-7453
www.hcd.ca.gov
July 17, 2026
Peter Rodgers
Executive Director
San Luis Obispo Council of Governments
1114 Marsh Street
San Luis Obispo, CA 93401
Dear Peter Rodgers:
RE: Final Regional Housing Need Determination Objection Response The California Department of Housing and Community Development (HCD) has received and reviewed your objection to the San Luis Obispo Council of Government’s (SLOCOG)’s final Regional Housing Needs Determination (RHND), which was provided to HCD on June 3, 2026.
Pursuant to Government Code (Gov. Code) section 65584.01(c)(3), HCD reports the results of its evaluation and consideration of SLOCOG’s proposed alternatives, along with its final written determination of SLOCOG’s RHND and an explanation of the information and methodology upon which HCD’s determination was made.
HCD began the consultation period with a meeting with SLOCOG on February 9, 2026, and requested that SLOCOG provide data to HCD for use in the region’s RHND, pursuant to Government Code section 65584.01(b)(1-2). SLOCOG did not provide HCD with any relevant data pursuant to Government Code section 65584.01(b)(1-2) during the consultation period.
Nevertheless, further consultation with HCD and the Department of Finance (DOF) resulted in modified population projections. Accordingly, HCD issued SLOCOG their determination on May 15, 2026, of 15,284 units.
Objections to the RHND must be based on or substantiate either of the following, pursuant to Government Code section 65584.01(c)(2)(A-B):
• The department failed to base its determination on the population projection for the region established pursuant to Government Code section 65584.01(a). If such failure is asserted, the council of governments shall identify the population projection which they believe should instead be used for the determination and explain the basis for its rationale.
• The regional housing need determined by the department is not a reasonable application Attachment 3
of the methodology and not based on reasonable assumptions determined pursuant to Government Code section 65584.01(b). The objection shall include a proposed alternative determination of its regional housing need, including analysis of why the proposed alternative would be a more reasonable application of the methodology and assumptions determined pursuant to Government Code section 65584.01(b).
HCD based its determination on population and household projections supplied by the California Department of Finance (DOF) Demographic Research Unit, pursuant to Government Code section 65584.01(a). The RHND for a region shall be based on DOF population and household projections, unless the region can provide HCD with an alternative population and household projections within the statutory parameters of Government Code section 65584.01(a). SLOCOG failed to provide HCD with alternative population and household projection data to provide the basis for an alternative population forecast. Therefore, HCD used DOF population and household projections in SLOCOG’s RHND.
In calculating the RHND, HCD adhered to the clear mandates of Government Code section 65584.01(b). Consequently, HCD will not alter its RHND methodology based on Suggestion 1 in SLOCOG’s objection letter. HCD has updated the ACS table used to calculate the cost burden adjustment (Suggestion 4) to Table B25140 so that the calculation is no longer inclusive of households paying exactly 30% of their income on housing costs. This reduced the cost burden adjustment while decreasing the preliminary RHND that is used to calculate the replacement adjustment for seasonal, recreational and occasional-use homes. Attachment 1 displays the minimum RHND of 14,577 total housing units among six income categories for SLOCOG to distribute among its local governments. Attachment 2 explains the methodology applied pursuant to Gov. Code section 65584.01. An updated Final Regional Housing Needs Determination letter has been included with this objection response letter.
First and foremost, the increase in SLOCOG’s 7th cycle Regional Housing Needs Determination (RHND) as compared to the 5th and 6th cycles is based on state housing law. Most notably, SLOCOG’s 6th cycle RHND did not include several adjustments required by statute to account for pent-up demand within the existing population, including the cost burden adjustment. In most regions of the state, including SLOCOG, the housing needs of the existing population account for the largest share of a region’s RHND. This is particularly true in regions where incidents of pent-up demand for housing are especially high. SLOCOG’s vacancy rate for rental households is 4.56%,
2.44% lower than the healthy standard of 7% as defined by academic research. SLOCOG’s cost burden rate is 38.57%, 7.85% higher than the national average of 30.71%, signaling a lack of affordable housing units for the county’s existing population. Additionally, according to the HUD’s 2024 Point-In-Time estimates of homelessness, San Luis Obispo County had 1,175 unhoused residents.
The RHND methodology establishes the minimum number of homes needed to house the region’s anticipated growth and address the housing needs of the existing population. Further, the RHND requires the region to implement zoning so that the minimum number of homes have the potential to be built. Therefore, the RHND assigned by HCD is already a reasonable application of the methodology and assumptions required under Government Code section 65584.01(b).
The following further explains HCD’s determination on each of SLOCOG’s objections:
SLOCOG Objection: “Population Projections Decrease in Cycle 7” Pursuant to Government Code section 65584.01(a), HCD’s SLOCOG determination is based on population projections produced by DOF. After initial consultations with HCD, SLOCOG staff consulted with DOF on multiple occasions during the consultation period and provided additional information that DOF considered, resulting in amended population data. Additionally, HCD extended the SLOCOG RHND deadline by 30 days in order for SLOCOG staff to review the newly available DOF data.
This objection notes that SLO County’s population projection in the upcoming 7th cycle is 278,000 which is lower than the 6th cycle projection of 300,000. The objection argues that despite slower population growth, the RHND increased from roughly 11,000 units in the 6th cycle to 15,000 units in the 7th cycle which “will be difficult to explain” to local communities.
To the contrary, the increase in SLOCOG’s RHND was in part due to statutory amendments that added new and necessary adjustments since SLOCOG’s 6th Cycle RHND. These legislative changes and resulting adjustments are intended to account for pent-up need for housing in the existing population. Furthermore, DOF projects total population to increase over the course of SLOCOG’s 7th Cycle. While the projected household population drops from 259,158 in 2028 to 257,968 in 2037, household formation rates increase from 55.5% in 2028 to 55.8% 2037. This growth will absolutely require additional housing units. HCD’s calculations use statutorily mandated DOF household population and household formation rates, resulting in anticipated household growth of 2,868 units from 113,044 to 115,912 over the projection period. State law requires the region to plan for the full extent of both existing and projected housing needs. Therefore, HCD rejects SLOCOG’s rationale for this objection.
SLOCOG Objection: “DOF Projections Do Not Account for Upcoming Permitted Housing Units” As stated above, the RHND methodology establishes the minimum number of homes needed to house the region’s anticipated growth and meet current, pent-up demand for housing within the existing population.
Pursuant to Government Code section 65584.01(a), HCD’s SLOCOG determination is based on population projections produced by DOF, or on population projections produced by the COG if within 1.5% of DOF’s projection. HCD utilizes the data provided by DOF when calculating the RHND. As per the methodology used to determine the E-5 Population and housing estimates, DOF uses the Housing Unit Method (HUM) to estimate the number of households. DOF projections use historical demographic and housing data. Core variables include household counts, total population, fertility rates, death rates, net migration rates, and the percentage of new housing completions. New housing completions are reported directly to DOF in the annual Housing Unit Survey that is submitted by every city and county. As a result, DOF considers constructed units, not issued building permits in HCD’s Housing Element Annual Progress Report (APR) data. DOF estimates and projections do not consider permitted units to estimate actual existing and projected households and housing units since permits are not guarantees of actual construction and realized units. The annual change in housing units is reported by local jurisdictions through the annual Housing Unit Survey forms administered by DOF. Therefore, HCD will not consider this objection as grounds for an alternative determination.
SLOCOG Objection: “Cost-Burdened Adjustment Multiplier Should Be Applied to the Preliminary Regional Housing Need Rather Than DOF’s Total Occupied Units” As noted above, HCD adheres to Government Code section 65584.01 when calculating the RHND. Neither HCD nor SLOCOG has authority to limit statutorily required adjustments. There is no credible basis to establish a “cap on add-ons if the totals severely outpace the projected need” (Suggestion 2). The cost burden adjustment is one of the adjustments that illustrate the housing needs of the existing population that must be reflected in the RHND.
Regarding SLOCOG’s Suggestion 3 in the objection letter, HCD will not be changing how the 7th cycle methodology is applied for the cost-burden adjustment. High rates of cost burdened households are one of the key indicators of a limited housing stock and pent-up demand in the existing population, leading existing households to spend a greater share of their income on housing costs. Per the California’s Housing Future 2040: The Next RHNA report, HCD consulted with demographers and other subject matter experts on best practices and determined that for the 7 th cycle and beyond, the cost burden and overcrowding adjustments should be applied to the existing population, rather than the projected population. Cost burden and overcrowding are issues that impact the existing population, and if the RHND is fully realized, future households should not experience cost burden and overcrowding at rates higher than the national average.
The overcrowding and cost burden adjustments compare the regional rate to the national average, which is required pursuant to Government Code section 65584.01(b)(1)(C)&(H). While the housing crisis is experienced nationwide, the national average does not reflect a desirable rate of cost burden; thus, by comparing regional rates against the national average, HCD is modest in its estimates of regional housing needs. The cost burden adjustment in the RHND does not obviate cost burden in the region – it merely requires the region to plan for enough housing so that the cost burden rate would be brought down to a level equal to that of the national average.
SLOCOG Objection: “SLOCOG staff suggests using ACS 5-year 2024 Table B25140” for Cost Burden Adjustment
SLOCOG’s objection letter notes that the cost burden factor in Government Code section 65584.01(b)(1)(H) provides: “…the share of very low, low-, moderate-, and above moderateincome households that are paying more than 30 percent of household income on housing costs [emphasis added].” HCD acknowledges that this is exclusive of households paying exactly 30 percent of their income on housing cost, not inclusive. HCD’s initial SLOCOG RHND used ACS data table DP04 which includes the number of households that are paying exactly 30 percent or more of their income on housing costs. This table was initially utilized because it provided additional context on the percent of cost burdened households by tenure. SLOCOG’s objection letter instead recommended the use of the ACS table B25140, which is exclusive of households paying 30 percent or less, and more accurately represents the statutory definition of households that experience housing cost-burden (Suggestion 4). As a result, HCD has updated SLOCOG’s Final RHND to utilize ACS table B25140 for the calculation of the cost burden adjustment (see attachments).
In contrast to its other suggestions, HCD has determined that SLOCOG’s request to use ACS Table B25140 is a reasonable application.
The recalculated cost burden adjustment results in an adjustment of 8,769 units rather than 9,433 units. Based on ACS table B25140, the national cost burden rate is 30.71% while the SLOCOG rate is 38.57%. Please also note that this change alters the preliminary RHND that is used for the Replacement (Seasonal, Recreational, and Occasional Use) adjustment. As a result, that adjustment is now 895 units rather than 938 units.
(A) DOF 2025 E5 Estimates: Occupied
Housing Units
111,638
Table DP04: Cost Burden Results Table B25140: Cost Burden Results National Average 32.21% National Average 30.71%
County Average 40.66% County Average 38.57%
(B) Difference 8.45% (B) Difference 7.85**%
Cost Burden
Adjustment (A*B)
9,433 Cost Burden
Adjustment (A*B)
8,769
** - Rounding to two digits
SLOCOG Objection: Remove Row 4b (Remove the Apartment-Style Student Housing Household Projection)
HCD is charged pursuant to Government Code section 65584.01 with the ultimate determination of existing and projected regional housing needs for each region of the state. While the statute anticipates fruitful, data driven consultation with each council of governments, it does not abdicate HCD’s statewide authority to make the final determination for each region. As noted above, HCD’s determination is based on methodology and assumptions grounded in state law and best practices.
Local government and other stakeholders have repeatedly requested that HCD allow for apartment-style student housing units to be counted in housing elements and APRs. Currently, these units are not eligible to be counted towards housing progress in housing elements or APRs because the Census Bureau includes any student housing in their estimates of group quarters, rather than household population, even though these units would otherwise meet the definition of a housing unit. For apartment-style student housing units to be eligible for credit towards a local government’s RHNA progress, that type of housing need must be present in the Regional Housing Needs Determination.
Thus, HCD has asked DOF to include the portion of the student population anticipated to live in apartment-style student housing in the total projected households estimate for the 7 th cycle. This
will allow local governments to claim credit for an additional type of housing in their community on their housing element and APR that was not available in the past, while maintaining alignment within the RHNA calculations and process. HCD has taken a conservative approach in estimating the number of future apartment-style student households by only applying the household formation rate for the 15-24 age group to all of these anticipated new households. If the apartment-style student household projection were to be omitted from SLOCOG’s RHND, local governments in the region would not be able to claim credit for these types of units in their housing element or APR.
Including apartment-style student housing need in the RHND in this way benefits both the City and County of San Luis Obispo, who have included student populations in their 6th cycle housing elements as a special housing need group that impact the broader housing supply in the region.
Therefore, HCD will not altogether delete the projected apartment style student household need row from SLOCOG’s 7th Cycle RHND (Suggestion 5). However, HCD has updated the formatting
of the Regional Housing Needs Determination summary table to clarify that the apartment-style student households are part of the region’s overall projected household estimates. Accordingly, the apartment-style student household projections are included in a separate line item to provide transparency into what portion of the overall projected households stem from apartment-style student households.
SLOCOG Objection: Replacement Adjustments
HCD is not changing the two replacement adjustments (Suggestion 6). Government Code section 65584.01(b)(1)(E) requires that the RHND include considerations for housing replacement needs.
Informed by subject matter experts and established research, HCD has determined this to include two types of replacement needs – replacement needs stemming from homes that will be lost to demolitions and homes that will be lost to non-primary residence uses (short-term rentals, second homes, etc.) during the projection period.
The Replacement (Demolitions) adjustment estimates the number of housing units needed to replace housing units that will likely be lost to demolition during the projection period. The calculation uses data from the DOF annual Housing Unit Survey, including the number of units demolished, the number of units lost due to a disaster during a State of Emergency (SoE), and the total number of existing housing units. First, HCD subtracts the number of units lost due to a disaster during a SoE from the total number of demolished units. Next, this difference is subtracted from the region’s total existing housing units. Using these figures, HCD calculates the average annual percentage of housing units lost to demolition. If the average annual percentage of housing units lost to demolition is lower than 0.1%, HCD applies a 0.1% minimum adjustment based on best practices to account for an increasingly aging housing stock across California and for any discrepancies in the state’s data collection methods that may result in an undercount in lost units.
Additionally, HCD notes that this adjustment is applied to projected households to ensure that a minimum number of homes are being added in the region to account for the natural aging and demolition of housing stock.
The Replacement (Seasonal, Recreational, Occasional Use) adjustment estimates the number of housing units needed to replace housing units that will be lost to uses such as short-term rentals and vacation homes. As described in the California’s Housing Future 2040 report, HCD heard from subject matter experts and other stakeholders that homes lost to non-primary residences are essentially demolitions, and that there is a need to account for this loss in the RHND process. HCD determined that an adjustment based on the estimated number of units lost to seasonal, recreational, and/or occasional use must be considered as part of the region’s housing replacement needs in the RHND. As a result, for the 7th cycle and beyond HCD will apply the Replacement (Seasonal, Recreational, Occasional Use) adjustment to the preliminary regional housing need for the region alongside the Replacement (Demolitions) adjustment. This is done to more fully capture the replacement housing needs of the region and so that the Final RHND is sufficiently large enough to plan for the number of units estimated to be lost to non-primary residences or commercial use over the projection period. As noted in the report, “in practice, the loss of units to short-term rentals and vacation homes has the same impact as a demolition: it results in a decrease in the number of housing units available for year-round occupancy.”
SLOCOG Objection: Jobs-Housing Adjustments
HCD will not change the Relationship Between Jobs and Housing adjustment nor the Feasible Jobs/Housing Balance adjustment. Pursuant to Government Code section 65584.01(b)(1)(G), HCD and the COG shall consider the relationship between jobs and housing, including any imbalance between jobs and housing. Additionally, pursuant to 65584.01(c)(1), HCD shall assess whether the region’s existing and projected housing need achieve a feasible balance based upon the assumptions and methodology determined pursuant to subdivision (b). These adjustments account for any existing jobs housing imbalance, as well as any projected imbalance based on regional job projections.
SLOCOG Objection: “Approved Housing Studies Should Be Valid for the Entire RHNA Cycle” While outside the RHND process, HCD will also not change its guidance at this time regarding the appropriate data to determine affordability for non-deed restricted new housing units (Suggestion 7). Government Code section 65400 requires each jurisdiction to prepare an APR using forms and definitions adopted by HCD. Using that statutory authority, HCD determined that any data used to determine affordability for non-deed restricted new housing must be no older than two years. This ensures the data used by local governments to justify affordability for new construction represents current market trends which reflect the dynamic nature of regional real estate economics and would not be reasonable to expect to be consistent over an eight-year period.
Next Steps
As you know, SLOCOG is responsible for adopting an allocation methodology and RHNA Plan for the projection period beginning June 30, 2028, and ending January 15, 2037. Pursuant to Gov.
Code section 65584(d), SLOCOG’s RHNA allocation methodology must further the following objectives:
(1) Increasing the housing supply and the mix of housing types, tenure, and affordability (2) Promoting infill development and socioeconomic equity, protecting environmental and agricultural resources, and encouraging efficient development patterns, and the achievement of the region’s greenhouse gas reductions targets provided by the State Air Resources Board pursuant to section 65080.
(3) Promoting an improved intraregional relationship between jobs and housing (4) Balancing disproportionate household income distributions (5) Affirmatively furthering fair housing.
Pursuant to Gov. Code section 65584.04(e), to the extent data is available, SLOCOG shall consider including the factors listed in Government Code section 65584.04(e) to develop its RHNA plan. Also, pursuant to Government Code section 65584.04(f), SLOCOG must explain in writing how each of these factors are incorporated into the RHNA plan methodology and how the methodology furthers the statutory objectives described above. Pursuant to Government Code section 65584.04(i), SLOCOG must consult with HCD and submit its draft allocation methodology to HCD for review.
HCD appreciates the active role of SLOCOG staff in providing data and input throughout the consultation period. HCD especially thanks Daniel Audelo, Jayden Hermansen, Sara Sanders, and James Worthley.
HCD looks forward to its continued partnership with SLOCOG to assist SLOCOG’s member jurisdictions meet and exceed the planning and production of the region’s housing needs. HCD encourages SLOCOG jurisdictions to consider the many affordable housing and community development resources available to local governments. HCD’s programs can be found at https://www.hcd.ca.gov/grantsfunding/nofas.shtml. HCD is also available to provide technical assistance to jurisdictions as they begin their housing element updates.
If HCD can provide any additional assistance, or if you, or your staff, have any questions, please contact Balaji Balaganesan, Senior Specialist, at [email protected].
Sincerely,
Marisa Prasse
Fair Housing Section Chief
Enclosures
cc: Zachary McRae, Assistant Deputy Director, California Department of Housing and Community Development
James Worthley, Deputy Director, San Luis Obispo Council of Governments Sara Sanders, Transportation Planner, San Luis Obispo Council of Governments Jayden Hermansen, Transportation Planner, San Luis Obispo Council of Governments Daniel Audelo, Transportation Planner, San Luis Obispo Council of Governments ATTACHMENT 1
HCD REGIONAL HOUSING NEED DETERMINATION
San Luis Obispo Council of Governments (SLOCOG):
June 30, 2028 through January 15, 2037
INCOME CATEGORY PERCENT HOUSING UNIT NEED
Acutely Low 11.0% 1,606
Extremely Low 9.9% 1,449
Very-Low 12.5% 1,827
Low 17.0% 2,484
Moderate 17.3% 2,522
Above-Moderate 32.2% 4,689
Total 100.0% 14,577
Notes:
Income Distribution:
Income categories are prescribed by California Health and Safety Code (Section 50063.5, et. seq.). Percentages are derived based on Census/ACS reported household income brackets and county median income as determined by HCD.
ATTACHMENT 2
HCD REGIONAL HOUSING NEED DETERMINATION:
San Luis Obispo Council of Governments (SLOCOG):
June 30, 2028 through January 15, 2037
Methodology
San Luis Obispo Council of Governments (SLOCOG):
June 30, 2028 – January 15, 2037 (8 years)
HCD Determined Population, Households, & Housing Unit Need Reference
No.
Steps Taken to Calculate Regional Housing Need Amount
1. Population: January 15, 2037 (DOF June 30, 2036
projection adjusted + 6.5 months to January 15, 2037)
278,125
2. - Group Quarters Population: January 15, 2037 (DOF June 30, 2036 projection adjusted + 6.5 months to January 15, 2037) -20,368
3. Household (HH) Population 257,757
4a. + Projected Apartment Style Student Households +116 4b. Projected Households 116,028
5. + Vacancy Adjustment for Existing Households +1,055
5. + Vacancy Adjustment for Projected Households +166
6. + Overcrowding Adjustment +777
7. + Cost-burden Adjustment +8,769
8. - Adjustment to account for HHs that experience both overcrowding and cost-burden (DOF data)
-777
9. + Replacement Adjustment Demolitions (0.1%) +116
10. + Replacement Adjustment Seasonal, Recreational, and Occasional Use (2016 vs. 2024) (6.54%)
+895
11. + Jobs Housing Relationship Adjustment +0
12. + Homelessness Adjustment +592
13. + State of Emergency Adjustment +0
14. - Occupied Units (HHs) estimated projected June 30, 2028 (from DOF data)
-113,044
15. Preliminary Regional Housing Need (Not including
Replacement Adjustment Seasonal, Recreational, and
Occasional Use)
13,682
16. + Feasible Jobs/Housing Balance Adjustment +0
Total 7
th Cycle Regional Housing Need Assessment (RHNA) 14,577 Detailed background data for this table is available upon request.
Explanation and Data Sources
1-4. Population, Group Quarters, Household Population, & Projected Households:
Pursuant to Government Code section 65584.01, projections were extrapolated from Department of Finance (DOF) projections. Population reflects total persons.
Group Quarter Population reflects persons in a dormitory, group home, institution, military, etc. that do not require residential housing. Household Population reflects persons requiring residential housing. Projected Households reflect the propensity of persons, by age-groups, to form households at different rates based on Census trends.
4a. Projected Apartment-Style Student Household Need: DOF provides projections of the student population expected to reside in apartment-style student housing by the end of the projection period. Under the US Census Bureau definitions, all student housing owned, leased, or managed by a college or university, including apartmentstyle units, are classified as group quarters (GQ) rather than as part of the household population. Because DOF household projections exclude the group quarters population, projected changes in the number of students living in apartment-style student housing are not captured in the baseline household forecast. HCD accounts for this by subtracting the student population residing in apartment-style student housing at the beginning of the projection period (2028) from the projected population at the end of the projection period (2037). The resulting net change in student population living in apartment-style student housing (+629) is then converted into projected households using the age 15-24 headship rate of 18.5 percent.
5. Vacancy Adjustment: HCD applies a vacancy adjustment based on the region’s current vacancy percentage to promote healthy market vacancies that facilitate housing availability and resident mobility. Healthy vacancy rates are 2% owner and 7% renter for MPO regions (6% for non-MPO regions). There are two methodologies utilized to calculate this adjustment. The first methodology is to calculate the vacancy adjustment for existing households. The adjustment for existing households is the difference between standard 2% and 7% vacancy rates and the region’s current vacancy rates based on the 2020-2024 5-year American Community Survey (ACS) data. That difference is then multiplied by the number of existing households by tenure (existing households multiplied by current rates of renter and owner). For SLOCOG, the existing household owner vacancy rate (1.97%) is below the healthy standard, resulting in a 0.03% adjustment. The existing household renter vacancy rate (4.56%) is also below the healthy standard, resulting in a 2.44% adjustment. The second methodology is to calculate the vacancy adjustment for projected households. The projected household vacancy adjustment is obtained by applying the standard 2% and 7% vacancy rates to the projected owner and renter households. The healthy vacancy rates (2% and 7%) are then multiplied by the number of projected households by tenure (projected households multiplied by current rates of renter and owner). Data is from the 2020- 2024 5-year ACS and DOF.
6. Overcrowding Adjustment: Pursuant to Government Code section 65584.01(b)(1)(C), HCD uses ACS data to consider the percentage of households that are overcrowded in the region compared to the United States national average of households that are overcrowded. In regions where the overcrowding rate is greater than the U.S. national average overcrowding rate (3.44%), HCD applies an adjustment based on the amount the region's overcrowding rate exceeds the U.S. overcrowding rate. For SLOCOG, the region’s overcrowding rate (4.14%) is higher than the national average (3.44%), resulting in a 0.70% adjustment. HCD then applies the 0.70% adjustment to total occupied households in the region (111,638).
Data is from the 2020-2024 5-year ACS and DOF 2025 E-5 Population Estimates.
7. Cost Burden Adjustment: Pursuant to Government Code section 65584.01(b)(1)(H), HCD uses ACS data to consider the percentage of households that are cost burdened in the region compared to the United States national average of households that are cost burdened. In regions where the cost burdened rate is greater than the U.S. national average rate (30.71%), HCD applies an adjustment based on the amount the region’s cost burdened rate exceeds the U.S. rate. For SLOCOG, the region’s cost burdened rate (38.57%) is higher than the national average (30.71%), resulting in a 7.85% adjustment. HCD then applies the 7.85% adjustment to total occupied households in the region (111,638). Data is from the 2020-2024 5-year ACS and DOF 2025 E-5 Population Estimates.
8. Overcrowding and Cost Burden Adjustment: To minimize double counting the housing needs of households that are both overcrowded and cost burdened, HCD has implemented an additional overcrowding and cost burden adjustment. For regions with an adjustment for both overcrowding and cost burden, a downward adjustment is applied based on the number of households that are estimated to be both overcrowded and cost burdened according to an analysis of 2024 ACS Public Use Microdata Sample File data (PUMS) provided by DOF. If the DOF data for this adjustment exceeds the individual adjustments for overcrowding or cost burden, then this adjustment is limited to the lesser of the two. This double counting consideration resulted in a 777-unit reduction.
9. Replacement Adjustment (Demolitions): HCD applies a replacement adjustment between 0.1% to 5% to the total housing stock based on the current 10-year average percent of demolitions in the region's local government annual reports to DOF. Units lost during a state of emergency declaration are not included. For SLOCOG, the 10-year average was 0.03% so the minimum adjustment of 0.1% is applied to the projected occupied households.
10. Replacement Adjustment (Seasonal, Recreational, and Occasional Use Housing Units): In addition to the demolition replacement adjustment, HCD also applies a replacement adjustment to account for housing units that are not available for permanent year-round occupancy. This adjustment is calculated based on the change in the percentage of housing units that are for seasonal, recreational, and occasional use per ACS data. There are two methodologies utilized to calculate this adjustment, depending on changes in the housing stock over the period of analysis.
If both the total number of seasonal, recreational, and occasional use housing units and the overall housing stock increased over the relevant 8-year period, HCD calculates the adjustment based on the proportion of newly added housing units used for seasonal, recreational, or occasional purposes during that time frame. This proportion is then applied as a percentage increase to the preliminary housing need assessment. If, however, either the total number of seasonal, recreational, and occasional use housing units or the overall housing stock decreased, HCD instead compares the change in the share of seasonal, recreational, occasional use housing units to total housing units. For SLOCOG, the total number of recreational housing and total housing units increased from 2016 to 2024, therefore HCD used the first option. From 2016 to 2024, seasonal, recreational, occasional use housing unit growth (+410) made up 6.54% of new housing unit growth (+6,270). HCD then applies the 6.54% to the preliminary RHND of 13,682 units, resulting in an 895-unit adjustment. Data is from the 2016 and 2024 ACS 5-year estimates.
11. Jobs Housing Relationship Adjustment: HCD applies an adjustment based on the number of in-commuters to a region. The adjustment is calculated by dividing the number of in-commuters to the region by HCD's jobs/housing standard of 1.5. This adjustment does not include commuters entering from or leaving to states other than California. In SLOCOG, the number of employed residents exceeded the number of people employed in the region, resulting in no adjustment. Data is from the US Census Bureau LEHD Origin-Destination Employment Statistics, 2023 and 2020-2024 5-year ACS.
12. Homelessness Adjustment: HCD applies an adjustment based on the housing needs of individuals and families experiencing homelessness. For non-COG regions and COGs that do not provide their own data, by default HCD uses the most recent Point-in-Time counts from the County's Continuum of Care and DOF household formation rates. An adjustment of 592 units was applied to SLOCOG using data from the San Luis Obispo County Continuum of Care 2024 Point-in-Time Count and DOF household formation rates. This adjustment is allocated to the acutely low- and extremely low-income categories, with 75% of the adjustment allocated to the acutely low-income category and 25% allocated to the extremely low-income category.
13. State of Emergency Adjustment: HCD used data provided by the California Governor’s Office of Emergency Services (CalOES) and the California Department of Forestry and Fire Protection (CAL FIRE) pursuant to Government Code section 65584.01(b)(1)(I) to adjust for units lost due to a declared state of emergency during the previous planning period (since 2020). Data is from 2025. To estimate the percentage of units lost that were originally occupied, HCD uses 2020-2024 ACS data to calculate the percentage of units in the region that are temporarily occupied by persons with a usual residence elsewhere. HCD then multiplies the occupancy rate by the units lost due to a state of emergency. For SLOCOG, this resulted in no adjustment to the RHNA. HCD uses the California Franchise Tax Board and CalOES list of disasters and emergency proclamations data to ensure that only units destroyed by a Governor-declared State of Emergency are utilized when calculating this adjustment.
14. Occupied Units: Reflects DOF's projected occupied units at the start of the projection period (June 30, 2028).
15. Preliminary Regional Housing Need Determination: Housing need calculated after applying factors described in Government Code section 65584.01(b). This preliminary Regional Housing Need Determination is used to evaluate feasible balance between jobs and housing and the Replacement Adjustment (Seasonal, Recreational, and Occasional Use).
16. Feasible Jobs/Housing Balance Adjustment: According to statute, the “region’s existing and projected housing need shall reflect the achievement of a feasible balance between jobs and housing within the region using the regional employment projections in the applicable regional transportation plan” (Gov. Code § 65584.01(c)(1)). After applying the adjustments noted above, HCD compared the 7th cycle RHNA determination and the region’s total occupied housing units to employment projections in SLOCOG’s Regional Growth Forecast to determine whether a feasible balance was achieved. This analysis resulted in a jobs housing balance of 1.14 (0.87 housing units for every projected job). Because this is below the healthy rate of 1.5, no additional adjustment is needed. Data is from the 2020- 2024 5-Year ACS data, US Census Bureau LEHD Origin-Destination Employment Statistics, 2022, and SLOCOG’s 2060 Regional Growth Forecast.