BACKGROUND:
The City’s General Plan is a comprehensive long-range planning document that directs the physical development of the city. The Housing Element is one of seven (7) Statemandated elements that comprise the City’s General Plan serving as a policy document to assess housing characteristics, community needs and establishing programs to meet those needs. The core purpose of the Housing Element is to identify and plan for the existing and projected housing needs of all segments of the community including families, seniors, workers, and the disabled. The Housing Element describes housing needs and conditions in Laguna Hills and establishes goals, policies, and programs to improve future housing opportunities. The planning period for this Housing Element is October 15, 2021, to October 15, 2029.
California State law requires all municipalities to periodically update the Housing Element. The City’s current Housing Element was adopted in 2013 by City Council. The City is required to adopt an updated version of the Housing Element for the 2021-2029 State Housing and Community Development planning period, also known as the 6th Cycle Housing Element Update, by October 15, 2021, but not later than the allowed grace period expiring February 11, 2022. The City Council is requested to review and comment upon the attached Public Review Draft of the 2021-2029 Housing Element Update, as has been prepared for the City by Placeworks, Inc., the City’s designated planning firm for this work effort, prior to the document’s submission to HCD for their initial 60-day review.
The number of housing units for which the City must plan is described in the Regional Housing Needs Allocation (RHNA). The Southern California Association of Governments (SCAG) determines the RHNA for the region and individual jurisdictions within its planning area. SCAG takes into consideration how the population changes, the regional economy, how the region’s transportation network affects the need for housing and how growth in the region will achieve state climate change goals and requirements. The RHNA results in a determination of how much housing a local jurisdiction must plan for during the next eight years. RHNA totals for Laguna Hills and surrounding jurisdictions is shown in the list below. In addition, Table 1 shows Laguna Hills’ RHNA by Income Categories as has been determined by SCAG.
• Laguna Hills: 1,985
• Lake Forest: 3,236
• Laguna Woods: 997
• Mission Viejo: 2,217
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• Aliso Viejo: 1,195
• Laguna Niguel: 1,207
• Irvine: 23,610
Table 1: Regional Housing Need Allocation by Income Categories, Laguna Hills Income Category 2021-2029 RHNA
Extremely Low (<30% AMI) 284
Very Low (31–50% AMI) 284
Low (51–80% AMI) 353
Moderate (81–120% AMI) 354
Above Moderate (>120% AMI) 710
Total 1,985
Source: SCAG RHNA, 2021
The State’s RHNA regulations require the City to plan for housing for all segments of a community, including for households with various income levels identified by state law.
These income categories are based on the county-wide median income. For Orange County, the average median income (AMI) for 2020 was $103,000 for a family of four.
Other income categories are based on the County AMI, and include the categories listed in the below Table 2. This table also shows the maximum housing costs considered to be affordable to households at the specified income levels.
Table 2: Summary of Housing Affordability and Availability, 2020 Income Group
Annual Income (Family of
Four)
Maximum
Affordable Rent
(Monthly)
Maximum
Affordable
Sales Price
Extremely Low (0–30% AMI) < $38,450 $961 $223,716
Very Low (31–50%) $38,451- $64,050 $1,601 $372,666
Low (51–80% AMI) $64,051-$102,450 $2,561 $596,092
Moderate (81–120% AMI) $102,451- $123,600 $3,090 $719,150 Calculation of affordable home sales prices assumes affordable payment, down payment of 10%, annual interest rate of 4%, 30-year mortgage. Income limits based on HCD Maximum Income Limits, 2020
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The City is not required to build housing but must demonstrate the availability of “adequate sites” for housing, meaning land that is suitable for residential development to accommodate the City’s share of RHNA. Since, Laguna Hills is a built-out community, the City must look to “underutilized sites” to accommodate the RHNA. The identified land of underutilized sites must have appropriate allowable uses, zoning, development standards and regulations that facilitate housing development for all income categories.
The identification of underutilized sites took into account public input, an analysis of land uses and the potential to modify the existing property to accommodate housing.
The depiction of available housing sites and underutilized potential housing sites are shown on Figures H-11 and H-12 in the attached Public Review Draft of the 2021-2029 Housing Element Update.
Density is one of the most important factors that affect the feasibility of housing that is affordable to households with lower incomes. Higher density zoning reduces the prorata cost of land for each housing unit, thereby reducing development cost for each housing unit. “Default” densities that are presumed to be suitable for lower-income housing are set by California statute. For Laguna Hills, like most cities in metropolitan areas, the default density is 30 housing units per acre. Based on the City’s current land inventory, the City does not have enough land already zoned at a minimum of 30 units per acre to meet the lower-income RHNA values or enough available land zoned for residential uses at medium densities to meet the moderate-income RHNA values.
Therefore, to satisfy the lower- and moderate-income RHNA values, the Housing Element includes Program H-11.
Appendix A of the Housing Element Update provides for a number of Specific Implementation Programs necessary for the City to comply with the intent of the Housing Element and, in certain cases, State Law. There is a total of 20 Programs with various timelines for compliance, ranging from “ongoing”, “annually”, “within two years or within three years” of adoption of the Housing Element Update, depending upon the specific program requirements. The rezoning of properties to allow for the ability to provide the number of housing units required by RHNA must be completed by February 2025. A recent change to State Law, however, depending upon its interpretation by HCD, could require the rezoning of properties to be accomplished at a sooner date (please see discussion below – “Potential consequences of not timely adopting a Housing Element Update”).
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Public Outreach During the Housing Element Update Process Public outreach and involvement in the Housing Element Update is desired, necessary and a requirement of this process and is reported in Appendix B. Accordingly, the following outreach activities have been completed as a part of this process. • City Council Agenda Item: November 10, 2020
• Stakeholder Consultations: January – February 2021
• Online Survey: June 15 – August 14, 2021
• Virtual Public Workshop: June 30, 2021
• In-Person Public Workshop: August 5, 2021
The above outreach activities have informed the preparation of the Housing Element Update. The public comments and input received in this process are included in Appendix B of the Public Review Draft of the 2021-2029 Housing Element Update.
Safety Element Update
The City has established goals and policies to maintain community safety and to reduce the risks associated with natural and human-caused hazards in Laguna Hills. The General Plan Safety Element addresses these issues and provides strategies to minimize hazard potential and protect the overall well-being of the residents in the community. As a related requirement to the Housing Element Update, Placeworks is also preparing an update to the Safety Element of the General Plan. The Safety Element Update, along with Housing Element Update, will be presented to City Council for approval in one future action.
Potential consequences of not timely adopting a Housing Element Update The Housing Element Update must be adopted by February 11, 2022. Before adopting the Housing Element Update, the City must refer the draft Housing Element Update to the Department of Housing and Community Development for a 60-day review period.
The City is also required to send the Housing Element Update and the Safety Element Update to other entities for their review and provide notice in accordance with State Law in advance of adoption of same. From the date HCD receives the draft Housing Element Update, it has 60 days to: 1) review the draft Housing Element Update; 2) determine whether the draft Housing Element Update substantially complies with state law; and 3) provide written findings to the City. Upon receipt of and addressing any HCD comments on the Housing Element Update, as well as from any other entities related to
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the Safety Element Update, a Public Hearing for adoption of the Housing Element Update and the Safety Element Update is to be scheduled for City Council consideration.
This Public Hearing is anticipated to be scheduled for February 8, 2022.
As part of AB 72 (2017-2018 Legislative Session), if the City does not expediently work with HCD to achieve certification of its Housing Element, the California Office of the Attorney General may be notified that the City’s Housing Element is out of compliance with Housing Element law, and the City may be subject to enforcement actions. The State may also remove certification of the City’s Housing Element if, in the future, the City does not act in accordance with State Law. According to HCD’s published enforcement strategy, decertification of Housing Element compliance is considered a precursor step to referring the case to the Attorney General’s office, a thirty-day notice is provided prior to decertification giving jurisdictions opportunities to respond to compliance issues.
Local governments with noncompliant housing elements are vulnerable to litigation from housing rights interest groups, property owners and HCD. If a jurisdiction faces a court action stemming from its lack of compliance and either loses or settles the case, it often must pay substantial attorney fees to the plaintiff’s attorneys in addition to the fees paid to its own attorneys. Potential consequences of lawsuits include: mandatory compliance within 120 days, suspension of local control on building matters, and court control of the approval of housing developments.
During the most recent State legislative session, AB 1398 (2020-2021 Legislative Session) was passed and signed into law by the Governor. AB 1398 amends certain provisions of the Government Code to penalize a city that “fails to adopt a housing element that [HCD] has found to be in substantial compliance with [the Housing Element Law] within 120 days of the statutory deadline” of October 15th by reducing the time the city has to complete the required rezoning of sites to one year from the October 15th adoption deadline. This means that, for the current housing element update cycle, cities subject to this penalty would have to complete the mandatory rezoning (including all environmental review pursuant to CEQA) by October 15, 2022, instead of 2025 under prior law.
If a city is subject to the requirement to complete its mandatory rezoning program by October 15, 2022 pursuant AB 1398, but fails to do so, and HCD previously certified the city’s housing element, HCD is authorized to revoke its previous certification and to refer the city to the Attorney General to bring a civil action against the city. In addition, for
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any city that adopts an updated housing element after October 15, 2022, AB 1398 also prohibits HCD from certifying the city’s housing element until the city completes its mandatory rezoning. There are numerous potential consequences for a city that does not adopt a legally compliant housing element or comply with legal mandates. These include, but are not limited to, the following:
• The city may be precluded from denying certain affordable housing projects even if they are inconsistent with the zoning and general plan. • The city is subject to litigation actions brought by the California Attorney General, HCD, developers, and/or housing advocacy groups.
• A court could suspend the city’s authority to issue any building or zoning permits or subdivision map approvals.
• Conversely, a court could mandate the city approve certain housing projects. • A court could order the city to pay a successful litigant’s attorney’s fees. • A court could order the City to pay significant monetary fines (starting at $10,000 to $100,000 per month) until it brings its housing element into compliance and could authorize the State Controller to intercept any state and local funds to satisfy unpaid fines.
• The city would be ineligible for certain state grants and incentives.
CEQA:
The Housing Element and Safety Element are expected to be adopted at the same future public hearing. The Housing Element updates policies and programs consistent with state law, and identifies a need to rezone land to meet RHNA. The Safety Element updates information in the General Plan regarding hazards and procedures to be used by the City in evaluating new development.
The Housing Element Update identifies multiple sites that the City will need to consider for rezoning. None of the specific sites have been selected at this point and the City may consider one or more of the sites in the table, and may discover other sites as the rezoning process begins. While the Housing Element Update includes a policy that requires rezoning, it does not identify specifically which sites will be rezoned. As CEQA does not require speculation, and study of sites that would not be rezoned will use the City’s limited resources in an inefficient manner, therefore, no in-depth environmental analysis will be conducted at this time. In addition, the Safety Element adds information
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to the General Plan, but does not include policies that would change the physical environment.
Staff anticipates that environmental benefits may come from the rezoning of properties through a reduction in vehicle miles travelled that will have corresponding benefits with air quality, greenhouse gas emissions, and noise. An addendum that addresses the overall citywide impacts of both the Housing Element Update and the Safety Element is planned to be presented for City Council consideration at a future public hearing.
FISCAL IMPACT:
Failure to timely adopt a Housing Element Update, as approved by the State Department of Housing and Community Development, can lead to adverse financial impacts on the City.
ATTACHMENTS:
• Laguna Hills Public Review Draft 2021-2029 Housing Element Update
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