Agenda — Law & Regulation Committee, March 23, 2022

AGENDA
March 23, 2022

CITY COUNCIL

LAW & REGULATION COMMITTEE
4:00 p.m.

Council Chambers
311 Vernon Street
Roseville, California
The meeting may be viewed on Comcast channel 14, Consolidated Communications channel 73, and AT&T U-Verse. City Council meetings are also video streamed live on the City’s website at roseville.ca.us/watch and roseville.ca.us/agenda, and the City’s YouTube channel at youtube.com/CityofRosevilleCa.

If you need a disability-related modification or accommodation to participate in this meeting, please contact Voice: 916-774-5200, TDD: 916-774-5220. Requests must be made as early as possible.

THE CITY OF ROSEVILLE WELCOMES YOUR PARTICIPATION
If an agenda item is open to public comment, such public comment shall be addressed to the chair of the meeting.

Public Comment
- Speakers have three minutes under Public Comment to speak on issues that
are not listed on the agenda and are within the City's jurisdiction. The Brown Act does not permit any action or discussion on items not listed on the agenda.

Consent Calendar
- If applicable, the Consent Calendar consists of routine items that may be approved by one motion. Any person can remove an item from the Consent Calendar to be discussed separately.

Agenda Items
- Speakers have five minutes to address items that are listed on the agenda.

Americans with Disabilities Act
- Notify the City Clerk or Secretary at least 72 hours in advance if special assistance is required to participate in a meeting including the need of auxiliary aids or services.

Audio/Visual Presentations
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Roseville City Clerk 311 Vernon Street, Roseville, CA 916-774-5200 TDD 916-774-5220

1. CALL TO ORDER

2. SILENT ROLL CALL

3. PLEDGE OF ALLEGIANCE

4. PUBLIC COMMENTS

5. MINUTES

6. REPORTS/COMMENTS/COMMITTEE/STAFF

6.1. State and Federal Priority Legislation - March 2022 Memo from Government Relations Administrator Mark Wolinski and Deputy City Manager Megan Scheid with a report that focuses on priority legislation being tracked regarding public safety, homelessness, and housing. The report also includes an overview of the Governor’s proposed Community Assistance, Recovery and Empowerment (CARE) Court and the Little Hoover Commission’s report on California Housing: Building a More Affordable Future.

CC #:
1982
File #:
0103-32-02
CONTACT:

Mark Wolinski 916-774-5179 [email protected]

6.2. Electric Department Priority Legislation - March 2022 Memo from Utility Government Relations Administrator Amber Blixt and Electric Utility Director Daniel Beans with a report that provides an overview of energy- related legislation and other activities that staff has been monitoring.

CC #:
1983
File #:
0103-32-02
CONTACT:

Amber Blixt 916-774-5693 [email protected]

6.3. Environmental Utilities Priority Legislation - March 2022 Memo from Utility Government Relations Administrator Noelle Mattock and Environmental Utilities Director Richard Plecker with an informational report on state and federal activities that staff have been engaged in and legislation that staff has identified as potentially having a significant impact on City utility customers and the Environmental Utilities Department.

CC #:
1984
File #:
0103-32-02
CONTACT:

Noelle Mattock
916-774-5504
[email protected]

7. ADJOURNMENT

CITY COUNCIL
Law & Regulation Committee
CC #:
1982
File #:
0103-32-02
Title:

State and Federal Priority Legislation - March 2022
Contact:

Mark Wolinski 916-774-5179 [email protected]

Meeting Date: 3/23/2022
Item #: 6.1.

RECOMMENDATION TO COUNCIL
In addition to public safety, two other policy areas that continue to be a focus of the Legislature this year are homelessness and housing. The Legislature continues to grapple with how to effectively address the housing crisis that has beleaguered the state for many years while also struggling to find solutions to the increasing challenges of homelessness. The following report provides a review of bills that may have positive implications if passed and several bills that are being monitored closely to understand what impacts they would have on the City if they were signed into law.

Public Safety
The Government Relations team has identified 304 bills with a potential impact to the Police Department and is coordinating with our industry partners at the California Police Chiefs Association and the California Peace Officers Association to analyze, prioritize, and strategize on those which could have the greatest impact. Although some bills are specific to law enforcement, many have cascading effects that would impact several other departments. At this early stage in the 2022 legislative cycle, common themes are emerging.

Those themes represent a wide range
of topics specific to policing, law enforcement operations, and criminal justice. Some of the themes represented in the 304 bills are:
- Fentanyl/Opioids
- Shoplifting
- Organized retail crime
- Organized package theft
- Un-serialized firearms
- Property crimes
- Human trafficking
- Homelessness
- Proposition 47, Safe Neighborhoods and Schools Act, approved by voters in 2014, reduces
some theft and drug felonies to misdemeanors
- Criminal sentencing/incarceration
We’ve identified four bills to highlight, one on criminal sentencing:
• CA AB 1670 (Bryan) Criminal justice: Alternatives to Incarceration (Watch) – this bill would create the Commission on Alternatives to Incarceration within the California Health and Human Services Agency who would study alternatives to incarceration, alternative crisis response models, and the effects of family separation in the jail and state prison systems. The bill would require the commission to report its findings and make recommendations to the Legislature no later than February 1, 2024, as specified. Staff comments: The department has taken a watch position on this legislation because the potential impacts of criminal sentencing reform and incarceration rates could have negative impacts. If convicted criminals have reduced sentences or are not required to serve jail time, the potential exists for crime rates to increase unless otherwise mitigated through the newly proposed commission.

The following three are related to Proposition 47, passed by voters in 2014 as the Safe Neighborhoods and Schools Act. At the time, Proposition 47 sought to reduce some theft and drug felonies to misdemeanors as a way to reduce incarceration rates and save the state money.

In recent years, some have called for adjustments to the proposition. Staff comments: we’re highlighting three proposed legislative adjustments to Proposition 47 because this legislation significantly impacted law enforcement’s ability to hold criminals accountable. We’re in strong support of any legislation that attempts to remedy the challenges Proposition 47 caused for law enforcement. We are though, analyzing the proposed legislation to determine which would create the best change and have the strongest chance of being enacted. Until further analysis, we will “Watch” the proposed changes to Proposition 47. It’s worth noting, AB 1599 would repeal Proposition 47 and is supported by the League of California Cities. • CA AB 1597 (Waldron) Shoplifting: Increased Penalties for Prior Crimes (Watch) – This bill would reinstate a provision of law that was repealed by Proposition 47 that provides a person who has been convicted 3 or more times of petty theft, grand theft, or other specified crimes and who is subsequently convicted of petty theft is subject to imprisonment in a county jail not exceeding one year or in a county jail for 18 months or 2 or 3 years. Staff comments: The department has taken a watch position on this legislation in order to further analyze its impacts and possibility of successful enactment.
• CA AB 1599 (Kiley) Proposition 47: Repeal (Watch) – This bill repeals the changes and additions made by Proposition 47, except those related to reducing the penalty for possession of concentrated cannabis. This bill reduces the value threshold for a violation of those provisions to be punishable as a felony from specified amount to specified amount. It also reduces the value threshold for committing grand theft under those provisions from specified amount to specified amount. This bill would move to submit this measure to the voters for approval at the next statewide general election. Staff comments: The City has taken a watch position on this legislation in order to further analyze its impacts and possibility of successful enactment. • CA AB 1603 (Salas) Theft: Shoplifting: Amount (Watch) – this bill would amend Proposition 47 by reducing the threshold amount for petty theft and shoplifting from $950 to $400. The changes would become effective only when submitted to, and approved by, the voters of the State. Staff comments: The City has taken a watch position on this legislation in order to further analyze its impacts and possibility of successful enactment.

Other Active Priority Bills – Homelessness and Housing
• AB 1615 (Ting) – Foster Youth: Housing (Support) - This bill would rename the housing navigator program as the Housing Navigation and Maintenance Program, and would extend eligibility and priority for the program to help young adults who are 18 to 24 years of age, inclusive, with priority given to young adults formerly or currently in the foster care system. Staff comments: The City has taken a support position on this bill for the assistance it would provide to foster youths. Statistics confirm that foster youths are a segment of the community that are vulnerable to becoming homeless. This bill would extend the age of eligibility for transitional housing in all counties to any former foster youth who is at least 18 years of age and not more than 25 years of age, and would extend the maximum time they may receive services pursuant to these provisions to 36 months. • SB 1006 (Jones) – Law Enforcement: Homelessness Outreach Teams (Support) - This bill would require the Department of Justice, to the extent funding is provided for these purposes, to administer a competitive grant program to enable local law enforcement agencies to establish and operate homeless outreach teams. The bill would require a homeless outreach team funded with a grant to be composed of specified individuals. Staff comments: The City has taken a support position on this bill as it would grant funds to local law enforcement agencies to establish and operate wrap-around service teams. The teams would need to include at minimum a mental health professional, a medical services professional, a representative of the county welfare department, and a law enforcement officer. The teams would focus on immediately assessing the needs of the homeless individuals/families, and immediately determine the best option for their housing and/or medical treatment.
• AB 2569 (Nguyen) Department of Homelessness Prevention, Outreach (Support) - This bill would require the California Health and Human Services Agency to convene a working group that includes representatives from all departments and agencies that currently receive funding relating to services for homeless individuals. The bill would require the working group to determine the best approach to creating a Department of Homelessness Prevention, Outreach, and Support and to submit its findings and recommendations to the Legislature no later than January 1, 2024. Staff comments: The City has taken a support position on the bill as it would require the Department of Homelessness Prevention, Outreach, and Support to create a simplified funding stream for providers in order to more easily provide services to homeless individuals who need them most.

Current funding for services for homeless individuals is split across several state departments and state agencies. This single point of contact will simplify the way services are provided to those experiencing homelessness. By consolidating and streamlining the overhead costs, regulations, funding, applications, and bureaucracy of providing services for homeless individuals and services to prevent homelessness at the state level, providers will be able to better serve California's homeless population.
• AB 2186 (Grayson) Housing Cost Reduction Incentive Program (Watch) - This bill would
establish the Housing Cost Reduction Incentive Program, to be administered by the department, for the purpose of reimbursing cities and counties for development impact fee waivers or reductions provided to qualified rental housing developments. Upon appropriation, the bill would require the department to provide grants to applicants in an amount equal to 50% of the amount of development impact fee waived or reduced for a qualified rental housing development by issuing a Notice of Funding Availability for each calendar year in which funds are made available for the program, as provided. Staff comments: The City has taken a watch position on this bill to understand how the creation of the Housing Cost Reduction Incentive Program would encourage cities and counties to waive or reduce impact fees for affordable rental housing developments and how the program would reimburse 50% of the value of fee waivers or reductions granted by a city.

The bill stipulates that in the event that incentive claims exceed appropriations in any given year, awards to cities and counties would be pro-rated. It is unclear how the bill would address this shortfall should it occur, which would be problematic for local governments wanting to participate in the program.
• AB 2755 (Muratsuchi) Right to Housing (Watch) - This bill would declare the intent of the Legislature to subsequently amend this bill to include provisions that would create a personal right to housing or shelter in this state and would establish a corresponding obligation for the unhoused to seek out and utilize available local housing or shelter options.

Staff comments: The City has
taken a watch position on this intent bill to understand what this bill may ultimately attempt to do and what implications that may have on the City. Staff is concerned the bill could result in additional new requirements, mandates and continuing impacts to land use and zoning. • AB 2218 (Quirk-Silva) Credit Services Organization (Support if Amended) – This is a gut and amend bill that now relates to the California Environmental Quality Act (CEQA) and would provide that a person does not have standing to bring an action or proceeding to attack, review, set aside, void, or annul acts or decisions of a public agency undertaken to implement a project involving the development of housing at an infill site, unless the person resides within 20 miles of the project.

Staff comments: The City has taken a support if amended position on the bill. Elements of CEQA continue to present challenges to the construction of affordable housing. This bill would place a restriction on who could challenge a housing project to those that live within a 20-mile radius of the project. Staff believes the radius is too large and will work to offer amendment language to the author that would reduce the radius.

Community Assistance, Recovery and Empowerment (CARE) Court Earlier this month, Governor Newsom outlined his proposal to overhaul how people with serious mental illnesses are treated throughout the state. The Governor announced his Community Assistance, Recovery and Empowerment (CARE) Court proposal that would allow family members, clinicians, first responders, and county staff to refer people experiencing a mental health crisis. A judge could require a 12-24 month treatment plan for the individual, including behavioral health services, medication, and housing.

Anyone referred to CARE Court would be represented by a public defender and would be provided a case manager, called a “supporter,” to help craft their specific care plan.

Supporters of the proposal, which will need to be approved by the Legislature, say it would provide a more effective and compassionate response to mental illness and substance abuse than directing people through the criminal justice system. The court would not always be a diversion program; people would be able to be referred to it even if they have not been arrested for a crime. Another facet of the court is that it would be able to impose sanctions on counties that do not carry out the care plans.

Some civil and disability-rights groups have begun to oppose the fact that the court would require mandatory treatment programs. They are concerned that if someone does not comply with the court-mandated care plan they could be referred for conservatorship, which remains a highly controversial process.

One element that many supporters and opponents of the proposal agree on is that details about how it will work are scarce. No bill has been written yet, and the administration has started a series of meetings with groups working in the mental health, homelessness, and disability fields, to gain their input.

Little Hoover Commission – Housing
The Little Hoover Commission (Commission) is an independent state oversight agency. By statute, the Commission is a bipartisan board whose purpose is “...to secure assistance for the Governor and itself in promoting economy, efficiency and improved services in the transaction of the public business in the various departments, agencies and instrumentalities of the executive branch of the state government, and in making the operation of all state departments, agencies and instrumentalities, and all expenditures of public funds, more directly responsive to the wishes of the people as expressed by their elected representatives...” The Commission fulfills this responsibility by listening to the public, consulting with the experts and conferring with the wise. In the course of its investigations, the Commission typically empanels advisory committees, conducts public hearings and visits government operations in action.

Last year, the Commission initiated a review examining how the state and local relationship can be strengthened to increase the supply of affordable housing. It recently released a report (Attachment B) that includes seven specific recommendations to address the housing crisis:
• Focus on Affordable Home Ownership and Increase Supply • Consolidate Housing
• Jumpstart Affordable Housing Production
• Fill Data and Analysis Gaps
• Measure Progress
• Enforce Accountability
• Invest in Shared Equity Models
Ultimately, the Commission’s report concludes that there are not enough homes throughout the state to safely house all residents. Subsequently, due to the limited supply of houses, market-rate homes are unattainable for many Californians.

The report goes on to express that the limited supply is a result of increased demand, but the high cost of housing also is the result of policy choices and impacts created by the California Environmental Quality Act (CEQA). Unfortunately, CEQA has been used by some to prevent housing construction they find objectionable.

The collective impact of laws, policies, behaviors, plus conditions outside of Californians’ control, is that developers cannot build homes that the median-income Californian can afford.

The report
concludes by saying that this is a problem that is shared by all Californians and is an incredibly challenging problem that the state and communities must work on collectively to overcome.

Conclusion
Public safety, housing and homelessness remain a significant focus of the Legislature and the Governor. The many and varied complexities related to housing and homelessness continue to produce significant amounts of legislation as solutions are sought that will result in measurable outcomes. Government relations staff continues to work closely with our state and federal lobbyist, trade associations, and others to track and advocate on the list of priority bills.

The following report focuses on priority legislation being tracked regarding public safety, homelessness, and housing. The report also includes an overview of the Governor’s proposed Community Assistance, Recovery and Empowerment (CARE) Court and the Little Hoover Commission’s report on California Housing: Building a More Affordable Future. Staff requests the committee’s input on any of the bills and/or issues that are of particular importance to the committee.

BACKGROUND
In addition to public safety, two other policy areas that continue to be a focus of the Legislature this year are homelessness and housing. The Legislature continues to grapple with how to effectively address the housing crisis that has beleaguered the state for many years while also struggling to find solutions to the increasing challenges of homelessness. The following report provides a review of bills that may have positive implications if passed and several bills that are being monitored closely to understand what impacts they would have on the City if they were signed into law.

Those themes represent a wide range
of topics specific to policing, law enforcement operations, and criminal justice. Some of the themes represented in the 304 bills are:
- Fentanyl/Opioids
- Shoplifting
- Organized retail crime
- Organized package theft
- Un-serialized firearms
- Property crimes
- Human trafficking
- Homelessness
- Proposition 47, Safe Neighborhoods and Schools Act, approved by voters in 2014, reduces
some theft and drug felonies to misdemeanors
- Criminal sentencing/incarceration
We’ve identified four bills to highlight, one on criminal sentencing:
•
CA AB 1670 (Bryan) Criminal justice: Alternatives to Incarceration (Watch) – this bill
would create the Commission on Alternatives to Incarceration within the California Health and Human Services Agency who would study alternatives to incarceration, alternative crisis response models, and the effects of family separation in the jail and state prison systems. The bill would require the commission to report its findings and make recommendations to the Legislature no later than February 1, 2024, as specified.

Staff comments: The department has taken a
watch position on this legislation because the potential impacts of criminal sentencing reform and incarceration rates could have negative impacts. If convicted criminals have reduced sentences or are not required to serve jail time, the potential exists for crime rates to increase unless otherwise mitigated through the newly proposed commission.

In recent years, some have called for adjustments to the proposition.

Staff comments: we’re
highlighting three proposed legislative adjustments to Proposition 47 because this legislation significantly impacted law enforcement’s ability to hold criminals accountable. We’re in strong support of any legislation that attempts to remedy the challenges Proposition 47 caused for law enforcement. We are though, analyzing the proposed legislation to determine which would create the best change and have the strongest chance of being enacted. Until further analysis, we will “Watch” the proposed changes to Proposition 47. It’s worth noting, AB 1599 would repeal Proposition 47 and is supported by the League of California Cities.

•
CA AB 1597 (Waldron) Shoplifting: Increased Penalties for Prior Crimes (Watch) – This
bill would reinstate a provision of law that was repealed by Proposition 47 that provides a person who has been convicted 3 or more times of petty theft, grand theft, or other specified crimes and who is subsequently convicted of petty theft is subject to imprisonment in a county jail not exceeding one year or in a county jail for 18 months or 2 or 3 years.

Staff comments: The
department has taken a watch position on this legislation in order to further analyze its impacts and possibility of successful enactment.

•
CA AB 1599 (Kiley) Proposition 47: Repeal (Watch)
– This bill repeals the changes and
additions made by Proposition 47, except those related to reducing the penalty for possession of concentrated cannabis. This bill reduces the value threshold for a violation of those provisions to be punishable as a felony from specified amount to specified amount. It also reduces the value threshold for committing grand theft under those provisions from specified amount to specified amount. This bill would move to submit this measure to the voters for approval at the next statewide general election.

Staff comments: The City has taken a watch position on this legislation in order to further analyze its impacts and possibility of successful enactment.

•
CA AB 1603 (Salas) Theft: Shoplifting: Amount (Watch)
– this bill would amend Proposition
47 by reducing the threshold amount for petty theft and shoplifting from $950 to $400. The changes would become effective only when submitted to, and approved by, the voters of the State.

Staff comments: The City has taken a watch position on this legislation in order to further analyze its impacts and possibility of successful enactment.

Staff comments:

The City has taken a support position on this bill for the assistance it would provide to foster youths. Statistics confirm that foster youths are a segment of the community that are vulnerable to becoming homeless. This bill would extend the age of eligibility for transitional housing in all counties to any former foster youth who is at least 18 years of age and not more than 25 years of age, and would extend the maximum time they may receive services pursuant to these provisions to 36 months. •
SB 1006 (Jones) – Law Enforcement: Homelessness Outreach Teams (Support) - This
bill would require the Department of Justice, to the extent funding is provided for these purposes, to administer a competitive grant program to enable local law enforcement agencies to establish and operate homeless outreach teams. The bill would require a homeless outreach team funded with a grant to be composed of specified individuals.

Staff comments: The City has taken a
support position on this bill as it would grant funds to local law enforcement agencies to establish and operate wrap-around service teams. The teams would need to include at minimum a mental health professional, a medical services professional, a representative of the county welfare department, and a law enforcement officer. The teams would focus on immediately assessing the needs of the homeless individuals/families, and immediately determine the best option for their housing and/or medical treatment.
•
AB 2569 (Nguyen) Department of Homelessness Prevention, Outreach (Support) - This
bill would require the California Health and Human Services Agency to convene a working group that includes representatives from all departments and agencies that currently receive funding relating to services for homeless individuals. The bill would require the working group to determine the best approach to creating a Department of Homelessness Prevention, Outreach, and Support and to submit its findings and recommendations to the Legislature no later than January 1, 2024.

Staff comments: The City has taken a support position on the bill as it would require the Department of Homelessness Prevention, Outreach, and Support to create a simplified funding stream for providers in order to more easily provide services to homeless individuals who need them most.

Current funding for services for homeless individuals is split across several state departments and state agencies. This single point of contact will simplify the way services are provided to those experiencing homelessness. By consolidating and streamlining the overhead costs, regulations, funding, applications, and bureaucracy of providing services for homeless individuals and services to prevent homelessness at the state level, providers will be able to better serve California's homeless population. •
AB 2186 (Grayson) Housing Cost Reduction Incentive Program (Watch) -
This bill would
establish the Housing Cost Reduction Incentive Program, to be administered by the department, for the purpose of reimbursing cities and counties for development impact fee waivers or reductions provided to qualified rental housing developments. Upon appropriation, the bill would require the department to provide grants to applicants in an amount equal to 50% of the amount of development impact fee waived or reduced for a qualified rental housing development by issuing a Notice of Funding Availability for each calendar year in which funds are made available for the program, as provided.

Staff comments: The City has taken a watch position on this bill to understand how the creation of the Housing Cost Reduction Incentive Program would encourage cities and counties to waive or reduce impact fees for affordable rental housing developments and how the program would reimburse 50% of the value of fee waivers or reductions granted by a city. The bill stipulates that in the event that incentive claims exceed appropriations in any given year, awards to cities and counties would be pro-rated. It is unclear how the bill would address this shortfall should it occur, which would be problematic for local governments wanting to participate in the program.

•
AB 2755 (Muratsuchi) Right to Housing (Watch)
- This bill would declare the intent of the
Legislature to subsequently amend this bill to include provisions that would create a personal right to housing or shelter in this state and would establish a corresponding obligation for the unhoused to seek out and utilize available local housing or shelter options.

Staff comments: The City has
taken a watch position on this intent bill to understand what this bill may ultimately attempt to do and what implications that may have on the City. Staff is concerned the bill could result in additional new requirements, mandates and continuing impacts to land use and zoning.
•
AB 2218 (Quirk-Silva) Credit Services Organization (Support if Amended) – This is a gut
and amend bill that now relates to the California Environmental Quality Act (CEQA) and would provide that a person does not have standing to bring an action or proceeding to attack, review, set aside, void, or annul acts or decisions of a public agency undertaken to implement a project involving the development of housing at an infill site, unless the person resides within 20 miles of the project.

Staff comments: The City has taken a support if amended position on the bill.

Elements of CEQA continue to present challenges to the construction of affordable housing. This bill would place a restriction on who could challenge a housing project to those that live within a 20-mile radius of the project. Staff believes the radius is too large and will work to offer amendment language to the author that would reduce the radius.

Community Assistance, Recovery and Empowerment (CARE) Court

Earlier this month, Governor Newsom outlined his proposal to overhaul how people with serious mental illnesses are treated throughout the state. The Governor announced his Community Assistance, Recovery and Empowerment (CARE) Court proposal that would allow family members, clinicians, first responders, and county staff to refer people experiencing a mental health crisis. A judge could require a 12-24 month treatment plan for the individual, including behavioral health services, medication, and housing.

Anyone referred to CARE Court would be represented by a public defender and would be provided a case manager, called a “supporter,” to help craft their specific care plan.

Little Hoover Commission – Housing

The Little Hoover Commission (Commission) is an independent state oversight agency. By statute, the Commission is a bipartisan board whose purpose is “...to secure assistance for the Governor and itself in promoting economy, efficiency and improved services in the transaction of the public business in the various departments, agencies and instrumentalities of the executive branch of the state government, and in making the operation of all state departments, agencies and instrumentalities, and all expenditures of public funds, more directly responsive to the wishes of the people as expressed by their elected representatives...” The Commission fulfills this responsibility by listening to the public, consulting with the experts and conferring with the wise. In the course of its investigations, the Commission typically empanels advisory committees, conducts public hearings and visits government operations in action.

The collective impact of laws, policies, behaviors, plus conditions outside of Californians’ control, is that developers cannot build homes that the median-income Californian can afford.

The report
concludes by saying that this is a problem that is shared by all Californians and is an incredibly challenging problem that the state and communities must work on collectively to overcome.

FISCAL IMPACT
The costs of these activities are contained within the City’s current budget.

ECONOMIC DEVELOPMENT / JOBS CREATED
The activities detained in this report will not result in job development or creation.

ENVIRONMENTAL REVIEW
The California Environmental Quality Act (CEQA) does not apply to activities that will not result in a direct or reasonably foreseeable indirect physical change in the environment, or is otherwise not considered a project as defined by CEQA Statute §21065 and CEQA State Guidelines §15060(c)(3) and §15378.

The action of reviewing legislation meets the above criteria and is not subject to CEQA.

No additional environmental review is required.

Respectfully Submitted,
Mark Wolinski, Government Relations Administrator
Megan Scheid, Deputy City Manager

ATTACHMENTS:

Description
Little Hoover Commission-Attachment A
California Housing: Building a More
Affordable Future
Report #267 | March 2022
Milton Marks Commission on California State
Government Organization and Economy
www.lhc.ca.gov
Attachment A
Dedicated to Promoting Economy
and Efficiency in California State
Government
The Little Hoover Commission, formally known as the Milton Marks “Little Hoover” Commission on California State Government Organization and Economy, is an independent state oversight agency.

By statute, the Commission is a bipartisan board composed of five public members appointed by the governor, four public members appointed by the Legislature, two senators and two assemblymembers.

In creating the Commission in 1962, the Legislature declared its purpose:
...to secure assistance for the Governor and itself in
promoting economy, efficiency and improved services in the transaction of the public business in the various departments, agencies and instrumentalities of the executive branch of the state government, and in making the operation of all state departments, agencies and instrumentalities, and
all expenditures of public funds, more directly responsive to the wishes of the people as expressed by their elected representatives...

The Commission fulfills this charge by listening to the public, consulting with the experts and conferring with the wise. In the course of its investigations, the Commission typically empanels advisory committees, conducts public hearings and visits government operations in action.

Its conclusions are submitted to the Governor and the Legislature for their consideration. Recommendations often take the form of legislation, which the Commission supports through the legislative process.

Contacting the Commission
All correspondence should be addressed to the Commission Office:

Little Hoover Commission
925 L Street, Suite 805, Sacramento, CA 95814
(916) 445-2125 | [email protected]
This report is available from the Commission’s website at www.lhc.ca.gov.

LITTLE HOOVER COMMISSION
Pedro Nava, Chair
Sean Varner, Vice Chair
Dion Aroner*
David Beier
Asm. Tasha Boerner Horvath
Cynthia Buiza
Anthony Cannella**
Asm. Phillip Chen
Bill Emmerson
Sen. Dave Min
Sen. Jim Nielsen
Janna Sidley

FORMER COMMISSIONERS

WHO SERVED DURING THE
STUDY
Asm. Chad Mayes
Asm. Bill Quirk
Sen. Richard Roth
Cathy Schwamberger†
*Served on study subcommittee
**Did not serve during this study
†Served as subcommittee chair

COMMISSION STAFF
Ethan Rarick, Executive Director
Tamar Foster, Deputy Executive
Director
Krystal Beckham
Ashley Hurley
Rachel Mattioli
Sayed Murad
Sherry McAlister
Tristan Stein
CALIFORNIA HOUSING: BUILDING A MORE AFFORDABLE FUTURE | 1 Table of Contents
EXECUTIVE SUMMARY ......................................................................3 INTRODUCTION ................................................................................. 5 THE PROBLEM ....................................................................................5 RECOMMENDATIONS AND DISCUSSION .......................................5 RECOMMENDATION 1: FOCUS ON AFFORDABLE HOME
OWNERSHIP AND INCREASE SUPPLY .............................................8 Affordable Home Ownership Requires Sustainable State
Investment .......................................................................................................9 RECOMMENDATION 2: CONSOLIDATE HOUSING
FUNCTIONS ...................................................................................... 10 Goals and the Policies to Achieve Them at Cross Purposes .....................11 Elected Leaders Must Have Shared Vision .................................................12 Consolidation .................................................................................................13 RECOMMENDATION 3: JUMPSTART AFFORDABLE HOUSING
PRODUCTION ....................................................................................13 Focused Working Group ...............................................................................13 Environmental Review..................................................................................14 RECOMMENDATION 4: FILL DATA AND ANALYSIS GAPS ............14 Data Gaps .......................................................................................................14 Technology .....................................................................................................15 Housing Policy Cannot Be Made with Anecdotes and Gut Feelings ........15 RECOMMENDATION 5: MEASURE PROGRESS .............................16 RECOMMENDATION 6: ENFORCE ACCOUNTABILITY ..................18 RECOMMENDATION 7: INVEST IN SHARED EQUITY
MODELS .............................................................................................19 CONCLUSION ....................................................................................21 NOTES ...............................................................................................22 2 | LITTLE HOOVER COMMISSION
Letter from the Chair
March 9, 2022
The Honorable Gavin Newsom
Governor of California
The Honorable Toni Atkins The Honorable Scott Wilk
Speaker pro Tempore of the Senate Senate Minority Leader and members of the Senate
The Honorable Anthony Rendon The Honorable James Gallagher Speaker of the Assembly Assembly Minority Leader
and members of the Assembly
DEAR GOVERNOR AND MEMBERS OF THE LEGISLATURE:

Last year, the Little Hoover Commission initiated a review examining how the state and local relationship can be strengthened to increase the supply of affordable housing. The following report details the Commission’s research and recommendations.

The Commission learned that California is short by two to three million homes to safely house its population. As a result of a limited supply, many Californians find themselves paying record prices for housing while others are priced out of the market entirely. The consequences of the state’s housing crisis are devastating. Many families have plunged into poverty, Californians are being pushed further away from their jobs, and others are thrust into crowded living conditions.

In this report, the Commission offers seven targeted recommendations to address the state’s housing crisis.

These recommendations are informed by the following themes: affordable home ownership, housing supply, cooperation with local government, addressing historical inequities and preventing new ones, and actions state leaders can take immediately.

Too often, steps to address the state’s housing shortage are impeded by a lack of political will or by Californians themselves. The Commission’s recommendations seek to provide a pathway forward in tackling this pressing crisis.

The Commission respectfully submits this work and standards prepared to help you take on this challenge.

Sincerely,
Pedro Nava, Chair
Little Hoover Commission

CALIFORNIA HOUSING: BUILDING A MORE AFFORDABLE FUTURE | 3 Letter from the Chair
Executive Summary
California is short by two to three million homes to
safely house its population. As a result, Californians
are paying record prices for housing and far too
many are finding themselves priced out of the
market.

The implications of California’s housing crisis are
devastating. The state’s poverty rate—when taking
into account cost of living—is the highest in the
nation. Californians looking for housing they can
afford are pushed farther away from their jobs, while
others are thrust into crowded living conditions.

Geography, population growth, policy choices, and
the behavior of institutional investors limit the
availability of affordable housing. However, political
will often stands in the way of tackling controversial
issues to create long-term housing solutions.

Sometimes Californians themselves stand in the way
of development.

In this report, the Commission outlines seven
recommendations that focus on issues that
policymakers can work on immediately to address
the state’s housing crisis.

Focus on Affordable Home
Ownership and Increase
Supply
State funding for affordable housing traditionally has
focused on rental housing. While it is critical that the state continue its support of renters, the Commission
recommends that the state expand its affordable
housing strategy, both in policy and funding, to put
a greater focus on affordable home ownership.

To avoid implementing a strategy this is counter-
productive, this policy expansion must also include
an emphasis on increasing housing supply.

Consolidate Housing
Functions
The state’s housing departments are spread across
four different agencies and divided under the
purviews of the governor and the state treasurer.

This organization is inefficient, resulting in confusion over responsibilities, service gaps, and a disconnect
between state goals and policies. Multiple elected
leaders must share the same housing vision in order
to create a statewide strategy, adding an additional
layer of complexity.

To help the state craft a better affordable housing
strategy and improve operations, California
should consolidate housing functions. The state
should also consider formalizing a strategic
working relationship—either by the Legislature or
through MOUs among agencies—between the two
constitutional officers and the agencies they oversee.

Jumpstart Affordable Housing
Production
The Governor should jumpstart affordable housing
production where it is needed most by treating
California’s housing shortage with the same urgency
as the state’s wildfire crisis. This includes creating
targeted working groups to tackle logistical and
policy challenges within a defined period of time and
building in CEQA flexibility to expedite projects.

Fill Data and Analysis Gaps
California lacks key pieces of information that would
help state leaders better understand the housing
crisis and potential solutions. Where data exists, it
is not always clear how policymakers use it to make
housing more affordable, and antiquated technology
stymies progress. Technological problems are
magnified at the local level, where some smaller
jurisdictions struggle to afford useful technology.
4 | LITTLE HOOVER COMMISSION
Using the best technology and methodologies
available, California should identify data and
analysis gaps. The state should transparently use
that information in its policymaking. Tools should
be shared with local governments either at cost or,
preferably, for free.

Measure Progress
California’s process for determining how much and
where housing needs to be built fails to account
for how much housing, particularly affordable
housing, is actually built. Furthermore, under the
current system, development is not planned where
it is needed and is planned in locations that defeat
California’s climate goals.

The state should reconsider how it measures local
governments’ progress toward housing goals to
include how many units are actually constructed
and how those units factor into California’s larger
climate goals. It may need to reconsider the Regional
Housing Needs Allocation process.

Enforce Accountability
The state lacks the tools it needs to effectively
enforce local governments’ housing plans. To bolster
enforcement under the current system, the state
should create and fund an ombudsman position
in every county with the authority to approve
affordable housing projects when a local jurisdiction
is noncompliant with its housing element.

To proactively enforce housing requirements, the
Governor should direct the Housing Accountability
Unit within the Department of Housing and
Community Development to develop reasonable
standards for when the state should sue
noncompliant localities.

Invest in Shared Equity
Models
California’s long history of discriminatory housing
and property ownership policies has excluded groups
from home ownership. To make home ownership
more accessible to a greater share of Californians,
the state should invest in shared equity housing
models, such as community land trusts. Under this
model, the government or a nonprofit subsidizes the
purchase of a home. In return, buyers agree to share
a percentage of the home’s equity with the agency or
nonprofit that helped them purchase it.

To ensure the sustainability of its affordable housing
investments, the state should specifically invest in
shared equity models that require the unit be sold
at below-market prices. Furthermore, to ensure that
residents are not stuck with a tax bill they cannot
afford, the state should require these units to be
taxed at their resale-restricted value.

CALIFORNIA HOUSING: BUILDING A MORE AFFORDABLE FUTURE | 5 Introduction
The Problem
California needs an additional 1.8 million to 3.5
million homes to adequately house its population.1
The Department of Housing and Community
Development called for the construction of 180,000
new units annually between 2015 and 2025 to close
the gap. Instead, the state has averaged around
80,000 new units per year.2 Prices go up when
demand severely outpaces supply.

The consequences are devastating. California’s
housing shortage has plunged many families into
poverty that otherwise wouldn’t be. California’s
poverty rate, at 11 percent, is on par with the
national average when cost of living is not taken
into consideration.3 When it is, California’s poverty
rate skyrockets to 17.2 percent – the highest in the
nation.4 And in California, the cost of housing is the
primary driver of the cost of living.5 This means that
more than 2 million Californians join the ranks of
those living in poverty. On average, they spend 50
percent or more of their income on housing.6 They
must work an additional 50 days per year compared
to average low-income Americans to meet basic
survival needs – food and shelter.7,8
The housing crisis results in Californians living farther away from their jobs, resulting in longer commutes
with more greenhouse gas emissions, and increased
building in areas prone to wildfire and other natural
disasters. It has public health implications by forcing Californians to live in more crowded conditions
and impacting the mental health of Californians
vulnerable to losing their home.9 Further, housing
insecurity contributes to feelings of hopelessness
and social conflict.10
Recommendations and
Discussion
The following themes inform the recommendations
in this report:
◊ Affordable home ownership. Existing state
programs primarily focus on helping the more
than 150,000 Californians without a home and
affordable rental housing.11 The Commission
believes it is critical that the state continue its
support of renters but asks the state to expand
its affordable housing focus to include more
affordable homeownership.

Many Californians think that the major housing policy problem is not lack of housing but keeping California “livable” i.e. unchanged for those who already have (own) a home. People who believe current laws and systems are working just fine, and that we should [consider] only no-impact housing, or that local control dominates all other considerations in the housing arena, oppose the types of systemic improvement in housing delivery proposed [in testimony].

To my neighbors who hold this view—yes, we live in wonderful place, but it is on all of us, in every neighborhood, to embrace change and do our fair share to house the next generation of Californians. If we refuse to accept the responsibility for the future of our children and our workers, then our “Golden State” will be for the “golden people”--wealthier and older homeowners who are cared for by a working underclass that is overcrowded, housing insecure, unable to buy a home, commuting long distances, and not happy about it. This is not the future California I want to leave to our children.

Denise Pinkston, Founder and President
The Casita Coalition
6 | LITTLE HOOVER COMMISSION
◊ Housing supply. California’s primary method
of helping homebuyers is with down payment
assistance. Without more homes, this simply
results in buyers bidding up housing costs with
the state’s backing as they compete for the same
homes.
◊ Cooperation with local governments. The state
makes laws, adopts statewide building codes, sets
goals, and provides financial assistance, while local
governments decide “when, where, and to what
extent housing development will occur.”12 These
separate functions highlight that cooperation is
essential.
◊ Addressing historical inequities and
preventing new ones. California’s long history of
discriminatory housing and property ownership
policies has had generational effects. The state
must acknowledge the long-term harm caused
by these practices and invest in models of
homeownership that reach Californians who
traditionally have been excluded from it. Further,
it is imperative to avoid well-intentioned policies
that lead to negative consequences, such as
displacement, going forward.
◊ Actions state leaders can take immediately.

Government agencies, academia, journalists,
industry insiders, and private citizens have
long sounded the alarm on California’s housing
shortage. The problem is political will, largely
informed by politicians’ constituents, particularly
the ones who are talented at raising money or
organizing votes for elected representatives – or
their opponents. California’s leaders know which
controversial subjects must be tackled to create
long-term housing solutions and that these will
take time: CEQA reform, Proposition 13 reform, a
sustainable funding source, and a larger industry
workforce, among others. This report focuses on
less-controversial actions the state can work on
immediately.

Figure A: The Cost of Housing in California Has Increased at a Faster Rate Than Californians’ Incomes
Median California Home Price and Median California Household Income 1984-2020, in 2020 dollars (in thousands).

Source: St. Louis Fed Alfred Archival Economic Data. https://alfred.stlouisfed.org. 0 100
200
300
400
500
600
700
800
Median Home Price Median Income
0 100
200
300
400
500
600
700
800
Median Home Price Median Income
CALIFORNIA HOUSING: BUILDING A MORE AFFORDABLE FUTURE | 7 Figure B: The Consequences of High Housing Costs
Source: California Legislative Analyst’s Office. March 17, 2015. California’s High Housing Costs: Causes and Consequences. https://lao.ca.gov/ reports/2015/finance/housing-costs/housing-costs.pdf
The Legislative Analyst’s Office (LAO) outlines the consequences of California’s high housing costs in its 2015 report, California’s High Housing Costs: Causes and Consequences. The many negative consequences include:

CROWDING
Californians are four times more likely to live in crowded housing than the average American. LAO statistical analysis found a correlation between crowding and a metropolitan area’s median home prices: As home prices go up, so does the likelihood of crowding.

This matters because research shows that those who live in crowded conditions suffer increased levels of stress and aggression. Crowding weakens relationships between parents and children.

Research suggests that crowding results in sleep disruptions, with harmful repercussions.

Children living in crowded conditions have lower grades and test scores than their uncrowded peers, and have more behavioral challenges in the classroom.

LONGER COMMUTES
In order to afford housing, more California workers have adopted the “drive until you qualify” approach, increasingly living further away from their jobs. The LAO found that a 10 percent increase in a metropolitan’s median rent is correlated with a 4.5 percent increase in individual commute times.

HARDER TO RECRUIT EMPLOYEES
High housing prices mean that employers must pay higher wages to keep up with the cost of living. Additionally, higher housing costs can make it more challenging to recruit talented employees. In a Silicon Valley Leadership Group survey, nearly three-quarters of the C-Suite respondents identified employee housing costs as the top challenge for the region’s employers.

STYMIED ECONOMIC GROWTH
Large cities typically have higher economic growth than other areas, but this has slowed due to prospective workers not being able to afford to live in those cities. While we do not have California-specific data, a joint UC Berkeley and University of Chicago study found that the United States GDP is 13 percent lower than it would have been because of housing supply in large cities.

8 | LITTLE HOOVER COMMISSION
Recommendation 1
California should expand its affordable housing
strategy, both in policies and funding, to place a
greater emphasis on affordable home ownership.

This policy expansion must include an emphasis
on increasing housing supply.

Governor Gavin Newsom and the Legislature deserve
credit for a historic commitment to affordable
housing. Governor Newsom’s first budget allocated
$1.75 billion to increase affordable housing
supply.13,14 The 2021-22 budget included $10.3 billion
for the planning, production, and preservation
of affordable housing.15 Governor Newsom has
requested an additional billion in the FY 2022-23
budget, largely to support infill development and
redevelopment in cities.16 All of this funding is much
needed, but it primarily has been one-time funding
and much of it reflects an unexpected budget
surplus. Further, most state funding for affordable
housing traditionally has been for rental housing. The
Commission believes the state should reorient its
focus to include more home ownership.

NIMBYism
The largest obstacle to creating more affordable
housing, a reporter for the New York Times
concluded, is sociological. He described the
experiences and thought process of former
Lafayette City Manager Steve Falk in 2012-13:

A developer had proposed putting 315 apartments
on a choice parcel along Deer Hill Road — close
to a Bay Area Rapid Transit station, and smack in
the view of a bunch of high-dollar properties. […]
Zoning rules allowed it, but neighbors seemed to
feel that if their opposition was vehement enough,
it could keep the Terraces unbuilt.

In letters to elected officials, and at the open
microphone that Mr. Falk observed at the City
Council meetings, residents said things like “too
aggressive,” “not respectful,” “embarrassment,”
“outraged,” “audacity,” “very urban,” “deeply
upset,” “unsightly,” “monstrosity,” “inconceivable,”
“simply outrageous,” “vehemently opposed,” “sheer
scope,” “very wrong,” “blocking views,” “does not
conform,” “property values will be destroyed,” and
“will allow more crime to be committed.”
Mr. Falk could see where this was going. There
would be years of hearings and design reviews and
historical assessments and environmental reports.

Voters would protest, the council would deny the
project, the developer would sue. Lafayette would
get mired in an expensive case that it would likely
lose.

Though Mr. Falk began his career as a local
control advocate concerned with maintaining
local character, he changed his views after
years of working with housing advocates then
watching his own children struggle to afford
housing. His newfound support of Governor
Brown’s threats to override local control in
affordable housing in general and the Terraces
development project in particular led to a public
rebuke from the City Council, an offer of a
sheriff’s escort for the Terraces representative
to safely reach her car following a City Council
meeting, and Mr. Falk’s resignation.

Source: Conor Dougherty. February 13, 2020. Updated February 12, 2021. “Build Build Build Build Build Build Build Build Build Build Build Build Build Build.” New York Times. https://www. nytimes.com/2020/02/13/business/economy/housing-crisis- conor-dougherty-golden-gates.html. Accessed August 10, 2021.

CALIFORNIA HOUSING: BUILDING A MORE AFFORDABLE FUTURE | 9 “Homeownership is affordable housing,” testified
Debbie Arakel, executive director for Habitat for
Humanity California.17 She continued:

California’s investment is too low on production
overall, but undisputedly nearly all affordable
production dollars go toward rental housing, with a
tiny percentage for affordable homeownership.

For example, between CalHFA and Housing and
Community Development […] only one program
exists to support affordable ownership production,
the CalHome program. This is the one program
where nonprofit affordable developers such as
Habitat for Humanity, can compete for funds.

There are a few other programs that don’t explicitly
exclude ownership housing, but program criteria
are specifically designed around rental production
and the scoring follows suit. Unfortunately, the
CalHome program is underfunded and woefully
oversubscribed by millions of dollars. During the last
award cycle, the program was oversubscribed by
157 million [dollars], about three times the amount
awarded.18
The state’s underinvestment in home ownership
matters because home equity is how most Americans
build and pass on wealth. The median net worth
of an American homeowner is $255,000, while the
median net worth of a renter is $6,300.19 Home
equity particularly is important for low-income
homeowners: It represents 81 percent of net wealth
for the bottom quintile of earners, whereas at the top
it comprises just 24 percent.20
Unlike rents, a standard fixed-rate mortgage will stay
stable over time, freeing up more income for other
necessities, savings, and investment in the future as
the homeowner’s earnings, in theory, increase over
time. A household that spends so much on housing
that it has difficulty affording other necessities is
considered cost-burdened. The threshold for this is
30 percent of a household’s income, and 3 million
out of California’s roughly 13 million households
are considered cost-burdened.21 Approximately 1.6
million of those households are considered severely
cost-burdened, meaning they spend more than 50
percent of their income on housing.22 As a reference
point, California’s top quartile of earners spend an
average of 16 percent of their income on housing.23
The state’s underinvestment
in home ownership matters
because home equity is how
most Americans build and pass
on wealth.

A focus on affordable home ownership is counter-
productive, however, without simultaneously
increasing housing supply. California’s primary
program for homebuyers is down payment
assistance. Without addressing the housing shortage,
Ms. Arakel testified, “The reality is that ‘would be’ low- income buyers can’t find homes for sale in their price
range and even with down payment assistance, they
are simply driving up the home price, competing with
other low-income buyers.”24

AFFORDABLE HOME OWNERSHIP REQUIRES

SUSTAINABLE STATE INVESTMENT
California must create a steady funding source
to accompany a new focus on affordable home
ownership. Former chief of HCD and California
Housing Finance Agency (CalHFA) Claudia Cappio
testified that such funding “would enable the
development of a more stable, long term housing
investment strategy, particularly when coupled with
other state revenue streams such as bonds, budget
allocations and tax credits. It would also minimize
the boom and bust cycle of housing bond funding
where HCD, in particular, has to massively ramp up
personnel and administration to get the funding
out and then ramp back down when the program is
completed.”25
10 | LITTLE HOOVER COMMISSION
Recommendation 2
The state should consolidate housing functions.

This would increase efficiency, create a seamless
customer service experience, and help ensure
that more Californians live in safe, sustainable,
and affordable housing.

The state’s housing departments are spread across
four different agencies. Additionally, the California
Department of Veterans Affairs (CalVet) provides
home loans to veterans. There are smaller programs
that also work on housing. For example, the state’s
Domestic Violence Housing First program, which
helps survivors stay in their existing home or find
new permanent housing, is located within the
Governor’s Office of Emergency Services.

The current organization is inefficient, results in
important service gaps, entrenches a disconnect
between state goals and policies, and requires
multiple elected leaders to share the same housing
vision to create a statewide strategy.

Figure C: From the California State Auditor: Housing Roles and Responsibilities This graphic by the California State Auditor shows the primary agencies responsible for affordable housing and describes their roles. The Little Hoover Commission has altered the image to indicate which state agencies fall under the governor (grey) and which fall under the state treasurer (light blue).

Source: California State Auditor. Report 2020-108. “California Housing.” http://www.auditor.ca.gov/pdfs/reports/2020-108.pdf CALIFORNIA HOUSING: BUILDING A MORE AFFORDABLE FUTURE | 11 Ms. Cappio testified to the inefficiency of the
current organization by breaking down the agencies
responsible for three major tools of home finance
– debt, equity, and subsidy – as well as asset
management, which involves monitoring the assets
each agency manages and reporting to state and
federal government primarily on physical condition,
tenancy, and financial audits. Figure D depicts her
description.

With similar functions spread across so many
agencies, there can be confusion over responsibilities
that results in service gaps. Ms. Arakel testified
that HCD staff, “shared that their role is to promote
affordable housing which they interpret as rental
housing. Furthermore, they expected that CalHFA
was fully addressing ownership housing needs.”
However, she testified, “CalHFA members expect that
ownership production is being funded by HCD.”26

GOALS AND THE POLICIES TO ACHIEVE

THEM AT CROSS PURPOSES
California’s leaders have made adapting to climate
change a key policy priority. Toward that end, leaders
have called for state housing policy to focus on dense
infill development and reduce distances Californians
drive to work.27 However, dense infill development
often is opposed by current residents, who are
concerned about traffic, the loss of open space and
other issues. Furthermore, infill development is
often so expensive that only well-off Californians can
afford to pay market rates. Denise Pinkston, partner
with San Francisco-based developer TMG Partners,
testified: “Modern mid-rise (4+ floors) buildings are
complex. They incorporate costly concrete parking
structures and require generators, fire life safety
systems, elevators, and full ADA systems that are
not required for much lower density stick frame and
single-family homes. It costs over $700,000 PER UNIT
in much of California to build a mid-rise apartment
home,” she explained.28
Consequently, local opposition to new housing
and the expense of infill development combine
to result in increasing numbers of homeowners
living increasing distances from their jobs, which is
inconsistent with California’s climate change focus.

A 2019 UCLA study on planned housing capacity
quantified this. Busy coastal metropolitan areas
Source: Claudia Cappio, Former Local Planning Official and Former Director, California Housing Finance Agency and Former Director, Housing and Community Development (2011-2015). September 23, 2021. Written testimony to the Commission. Page 1.

Figure D: Some Housing Functions Are Performed by Multiple Agencies CalHFA: California Housing Finance Agency
CDLAC: California Debt Limit Allocation Committee
TCAC: California Tax Credit Allocation Committee
HCD: Housing and Community Development Dept.

CSD: Community Services and Development Dept.

CalVet: California Dept. of Veterans Affairs

DEBT EQUITY SUBSIDY ASSET MANAGEMENT

12 | LITTLE HOOVER COMMISSION
San Bernardino
County
+3.2%
Riverside County
+2.8%
Kern County
+7%
Santa Clara
County
-2.2%
Los Angeles
County
-5.5%
Sacramento
Valley
Bay Area
Central
Sierra
San Joaquin
Valley
Southern Border
Southern
California
Inland
Empire
Central
Coast
Northern California
Region Population
Share
Planned
Capacity Share Difference
Bay Area 20.3% 13.3% -7.0%
Central Coast 3.1% 1.7% -1.4%
Central Sierra 0.5% 0.8% 0.3%
Inland Empire 11.5% 17.5% 6.0%
Northern California 1.4% 3.6% 2.2%
Sacramento Valley 7.6% 9.1% 1.5%
San Joaquin Valley 10.6% 21.7% 11.0%
Southern Border 8.9% 8.3% -0.5%
Southern California 36.2% 24.1% -12.1%
-5.6% -2.5% -1% 2.5% 7%
California Regions
1%
Population and planned housing capacity share by region Orange
County
-5.6%
Figure E: UCLA Research Shows Mismatch Between Planned Housing Capacity and Needs
IMAGE REPRODUCED FROM ORIGINAL SOURCE: UCLA. February 2019. “Not Nearly Enough: California Lacks Capacity to Meet Lofty Housing Goals.” https://www.lewis.ucla.edu/research/california-lacks-capacity-to-meet-lofty-housing-goals/.

Difference between population and share of statewide planned housing capacity share by region overwhelmingly are not planning housing that meets
their population needs, while inland areas appear to
be planning for a population influx.29

ELECTED LEADERS MUST HAVE SHARED
VISION
Housing functions are divided among agencies under
the purviews of the governor and state treasurer. As
both are independently elected officials, a statewide
strategy for affordable housing requires both officials to share the same vision for housing. To be clear,
the Commission is not remarking on the relationship
between the current governor and state treasurer,
but highlighting a structure that is difficult under
the best of circumstances. No matter how good the
CALIFORNIA HOUSING: BUILDING A MORE AFFORDABLE FUTURE | 13 relationship between a governor and state treasurer,
voters can change either or both of those office
holders every four years. It is challenging enough
to craft a decades-long strategy that will survive
policymaker turnover; adding another constitutional
officer to the mix makes it that much harder.

With similar functions spread
across so many agencies,
there can be confusion over
responsibilities that results in
service gaps.

CONSOLIDATION
At a minimum, the state would benefit from
functional consolidation across state agencies.

Consolidating the functions Ms. Cappio detailed at
the beginning of this section would allow the state to
better create an affordable housing strategy, improve
everyday operations, and streamline the process for
developers interested in affordable housing.30
The state should also consider formalizing a strategic
working relationship between the two constitutional
officers and the agencies they oversee. This could be
done by the Legislature or through MOUs between
the agencies. A sunset clause would allow for a
reassessment of how this has worked. Californians
deserve the benefits that a cohesive strategy and
consolidated functions would provide.

Recommendation 3
The governor should jumpstart affordable
housing production where it is most needed by
adopting the model used to attack California’s
wildfire crises. This includes:
◊ Assigning key stakeholders to working groups
to tackle logistical and policy challenges
within a defined period of time.
◊ Requiring stakeholders to identify the areas
in which affordable housing is most urgently
needed and, issuing executive orders if
necessary, completing projects meeting those
needs within a defined period of time.
◊ Building in CEQA flexibility to expedite the
projects. At a minimum, the state should
require CEQA challenges to be resolved within
a year – a provision it has adopted in the past
to quickly build sports arenas. A team should
be assigned to monitor these processes,
identify pain points and best practices, and
make recommendations to the Governor and
Legislature on how to roll this out statewide.

California’s housing shortage should be treated with
the same urgency as the state’s wildfire crises. The
difference between the two is that the devastating
effects of wildfire on people, homes, the economy,
and the environment can be seen immediately,
whereas similarly devastating effects caused by the
housing shortage are slower to appear. Further,
wildfire does not discriminate, while wealthier
Californians are able to distance themselves from the
immediate impacts of the housing shortage.

FOCUSED WORKING GROUPS
The Commission urges the state to adopt for housing
the model it uses to combat high-intensity wildfires.

In it, state task forces assigned stakeholders from all levels of government and outside of government to
working groups identifying logistical and regulatory
challenges and proposing solutions to create resilient
forests. Far from being death by committee, these
task forces had set goals, meetings, and deadlines to
report their results. Governor Newsom supercharged
this effort by ordering CAL FIRE to identify potential
projects in the areas of highest need, then
declaring a state of emergency to complete the
35 identified projects within a year. This entailed
suspending procurement rules, state statutes and
regulations, including CEQA (with the cooperation
of the California Natural Resources and California
14 | LITTLE HOOVER COMMISSION
Environmental Protection Agency Secretaries), and
adjusting workforce licensing requirements, among
other provisions.31,32
The Commission believes a similar approach would
galvanize state efforts to combat the affordable
housing crisis. It suggests using the UC Berkeley
Terner Center’s analysis of the costs of construction
as a starting point when creating working groups.33
Funding to participating state agencies should be
increased to account for the additional workload,
while grants should be provided to organizations
outside of state government so they can afford to
participate.

ENVIRONMENTAL REVIEW
The Commission recommends the governor
assign a team to monitor the impacts of relaxed
CEQA application. This team should create
recommendations for the administration and
legislature on permanently adjusting those laws and
processes to hasten affordable housing production
while also protecting the environment.

The latter is necessary because CEQA often is used
beyond its original scope to kill housing projects. For example, the Commission learned of a proposal that
would create 300 units of high-rise housing next to
public transportation. The developer agreed to use
union labor and pay $20 million to the community
to be used for affordable housing and mitigate the
impacts of construction. The environmental impact
review (EIR) process included 35 public hearings
spanning two years. The proposed project was put on
the ballot twice, and both times the region’s residents voted in favor of it. The city council approved the
project. After the project was approved, however,
an individual filed an EIR lawsuit claiming the nearby
public transportation did not have the capacity to
accommodate the additional people the high-rise
would serve, and that the EIR had not properly
analyzed this. The court rejected the lawsuit nine
months later, but the housing market had shifted
over the nearly three-year planning process. Lenders
pulled their funding commitments because the
developer could not prove that it could repay them
under the new market conditions, and the project
died.34
Recommendation 4
California must identify data and analysis gaps
that prevent its leaders from fully understanding
the housing crisis and potential solutions. It
should collect and analyze that data using the
best available technology and methodologies,
and share those tools with local governments
either at-cost, or preferably, for free. Finally, it
should transparently use that information in
its policymaking. Identified areas of concern
include development fees, mass home purchases
by institutional investors, and the cumulative
impact of laws and regulations on the cost of
housing.

California has a data problem. While four different
housing agencies collect and report certain data,
decision-makers lack key pieces of information that
would provide a complete picture of the housing
crisis and potential courses of action. Where data
does exist, it is not always clear how policymakers
use it to make housing more affordable. Additionally,
some of the state’s own technology is antiquated and
local governments do not always have the means
to apply state-of-the-art technology to their data
collection, planning, and implementation processes.

DATA GAPS
Development Fees. Development fees are an
important example of missing data. No one has a
complete list of fees and what they are used for
in every jurisdiction. The Terner Center conducted
a seven-city analysis of development fees and
a 40-jurisdiction study on impact fees, a subset
of development fees; their subsequent reports
described a shocking lack of transparency. Though
some cities provide an option to calculate some
CALIFORNIA HOUSING: BUILDING A MORE AFFORDABLE FUTURE | 15 or all development fees up front, in other major
metropolitan areas, such as Oakland and Los
Angeles, developers only learn what fees were
charged when they’re billed after the project is
complete.35 These types of fees can add more than
$150,000 to the cost of a home on top of land, labor,
materials, and other expenses.36 State government
cannot combat the housing crisis without knowing
how much it actually costs to build housing.

Institutional Investors. Another important example
of missing data is the impact of institutional investor home purchases on the housing crisis. Since the
Great Recession, financial institutions have snapped
up single-family homes worldwide to rent or hold
onto until property values increase. They first
targeted foreclosed homes, though since then many
have developed systems to evaluate all homes on
the market. It is difficult for individual homebuyers
to compete with institutions. One company prides
itself on being able to analyze all homes in a targeted area within 15 minutes of appearing on the Multiple
Listing Service, and make a cash offer on homes that
meet its criteria within two hours.37
State government cannot
combat the housing crisis
without knowing how much it
actually costs to build housing.

The extent of institutional investment and the impact
of the state’s housing market is controversial, with
some saying it is a serious problem and others
saying there are so few investor-owned homes that
it doesn’t warrant policymaker attention. Part of the
problem is that county assessor information isn’t very
useful in determining who owns a home: Many older
homeowners place their home in a trust to make it
easier for their children to inherit, and it is common
for smaller landlords to incorporate as LLCs.38 There
is no easy way to separate out which corporation-
owned homes belong to individuals, and which
are owned by institutions. In 2018, the Legislature
enacted a law that would require a registry of the
largest institutional investors, but Governor Brown
vetoed it, saying that a database would not stop the
problem.39,40 A second attempt that also included a
tax died in committee in 2021.41
The Commission believes that additional data is
needed to assess this problem. In order to craft a
policy solution, the state must first know the size and scope of the problem.

TECHNOLOGY
The state needs to upgrade some of its housing-
related technology. Former state housing director
Ben Metcalf testified that the state’s current IT
platform for tracking local government housing
element compliance – the Housing Element Tracking
Systems – is antiquated. The system “does not
currently offer a robust system for tracking and
flagging failures of cities and counties to achieve the programmatic commitments incorporated into their
Housing Elements.”42
The state’s technological problems are magnified
at the local level, where many smaller jurisdictions
struggle to pay for software and other helpful
technology. At a minimum, the state should use its
bulk purchasing power to buy tools, such as GIS
software licenses, at a lower cost than a small local
government would be able to negotiate on its own,
then provide it at-cost to local jurisdictions. However, because local governments are instrumental in
facilitating housing, and the housing shortage is so
severe, the Commission believes California would
be best served if the state completely subsidized
appropriate technology for local governments.

HOUSING POLICY CANNOT BE MADE WITH

ANECDOTES AND GUT FEELINGS
Once the state has good data, it must use it
effectively in making policy. An important area where
the intersection of data and technology can aid
16 | LITTLE HOOVER COMMISSION
decision-making is the cumulative impact of laws and
regulations on housing development. “Estimating
the likely impact of specific housing policy changes
has historically been an anecdotal undertaking,” Mr.

Metcalf testified. “To the extent analyses of specific
housing regulations have been modelled, such as
housing impact fees or parking requirements, such
models typically focus on one policy at a time. In
reality, land use and housing policies interact with
one another to influence the likelihood of residential
development.”43
Mr. Metcalf described a tool created by the Terner
Center that aggregates the impact of housing policies
down to the parcel level. Users can see changes
under different market conditions. The tool allows
users to understand the “likely probability of new
housing development under different scenarios” and
the underlying constraints inhibiting development.44
Mr. Metcalf concluded, “Some policy interventions
that policymakers and advocates prefer may yield
counterintuitive results – sounding good in theory
but resulting in a trivial, or even negative, change in developable parcels. While no model can perfectly
predict future development activity, policymakers’
decision-making processes should be based on the
best evidence and analysis available.”45
Recommendation 5
The state should reconsider how it measures local
governments’ progress toward housing goals to
include how many units are actually constructed
and how those units factor into California’s larger
climate goals.

Figure G shows the process conducted by the state
and regional governments to determine how much
and where housing needs to be built. This is called
the Regional Housing Needs Assessment (RHNA). In
short, HCD assigns each region an estimate of how
many units need to be built over the next eight years
to meet current population needs plus forecasted
growth. Regions divide that estimate among
individual jurisdictions, and those jurisdictions
must prove in the housing element portion of their
General Plan that they have “adequate capacity of
developable sites” to meet their share. There is no
standardized definition of adequate capacity.46
A housing allocation process
that fails to account for how
much housing is actually built
is fundamentally flawed.

Missing from this process is accountability for how
much housing, particularly affordable housing, is
actually built.

The advantage of the current system over focusing
on units built is that is that zoning is within local
jurisdictions’ control, whereas local governments
can’t force developers to build. Because a method of
measurement is easier, however, does not make it
useful.

A housing allocation process that fails to account for
how much housing is actually built is fundamentally
flawed. The state’s evaluation of local governments’
progress toward housing goals should include how
many units are actually constructed.

The state also should prioritize redevelopment and
infill development to be consistent with larger climate goals. Under the current system, development is
not planned where it is needed and is planned in
locations that defeat California’s climate goals.

The state also must consider its own actions when
assessing those of local governments. If the state
with all its resources cannot subsidize costly infill-
and redevelopment, how can it expect smaller local
governments to do so?
Higher-accuracy planning that focuses on
development where it is needed and takes into
CALIFORNIA HOUSING: BUILDING A MORE AFFORDABLE FUTURE | 17 Figure G: Affordable Housing: The State and Local Process (A Layperson’s Guide) HCD
Determines Regional Housing
Needs Assessment.

COUNCIL OF

GOVERNMENTS (COG)
Prepares its own assessment
of regional housing needs.

HCD AND COG
Incorporate COG’s figures
into final Assessment.

COG
Divvies up the housing
needs among the
region’s individual
jurisdictions via the
Regional Housing
Need Allocation
(RHNA) Plan.

LOCAL

GOVERNMENTS
Update Housing
Element of general
plan to reflect new
RHNA share, submit
to HCD.

HCD
Reviews and certifies
Housing Element.

LOCAL GOVERNMENTS
Adopt Housing Element as
part of their General Plan.

LOCAL GOVERNMENTS
Submit Annual Progress
Report (APR) to HCD and OPR.

HCD
Reviews APR as well
as any evidence that a
local government is
not in compliance with
the Housing Element. HCD
Works with local government
to attain compliance.
(If non-compliant) (If still non-compliant)
HCD
Decertifies Housing Element and
may notify Attorney General.

ATTORNEY GENERAL
No action required.

GLOSSARY
Annual Progress Report: Annual reporting of a jurisdiction’s progress in fulfilling its Housing Element.

Assessment: The determination of how much housing and at what affordability levels a region needs to meet the needs of the people who live there.

Council of Governments (COG): City and county
governments within a region that meet to determine regional housing needs.

Decertification: Local governments may lose control over approval of affordable housing projects if stakeholders pursue a court order.

General Plan: A local government’s blueprint on how it will develop and manage conservation, housing, land use, open space, noise, safety, and transportation.

HCD: California Department of Housing and Community
Development.

Housing Element: Component of General Plan that includes an analysis of a jurisdiction’s housing needs for all income levels and its plan to meet those needs.

Local Governments: City and county governments.

OPR: Office of Planning and Research.

Regional Housing Need Allocation (RHNA) Plan: The plan
that outlines the new housing quantity and price points assigned to each jurisdiction within a region.
18 | LITTLE HOOVER COMMISSION
consideration the state’s actions likely would require
redesigning or scrapping the current RHNA process.

The first use of the current process began in 1969
after the state enacted a law requiring cities to plan
for their community’s housing needs at all income
levels. More than 50 years later, California is short
by two million to three million homes, the home
ownership rate is at the lowest level since the 1940s,
and housing costs have plunged more than two
million Californians into poverty. The system must be
changed.

Recommendation 6
The state should better enforce its housing
requirements by creating and funding an
ombudsman position in every county with the
authority to approve affordable housing projects
when a local jurisdiction is noncompliant with
its housing element. Additionally, the governor
should direct the Housing Accountability Unit
within the Housing and Community Development
Department to proactively enforce housing
requirements and develop reasonable standards
for when a case should be brought to the state’s
Department of Justice to sue noncompliant
localities.

The state lacks the tools it needs to effectively
enforce housing elements. Though the Commission
argues for reworking the current RHNA/housing
element approach, in the meantime the state must
be able to enforce its current system. HCD may
decertify a housing element and notify the Attorney
General, but a provision requiring the Attorney
General to sue noncompliant localities was stripped
from the decertification bill. A different bill that would have given the state the power to fine noncompliant
localities did not pass.47
Decertification means a local jurisdiction loses
the ability to deny permits for certain types of
affordable housing until it is back in compliance.

The process to “automatically” receive a permit
when a locality is in noncompliance usually is
to obtain a court order requiring the locality to
issue the document. However, developers can be
reluctant to take local governments to court over
affordable housing because they will need to work
with them in the future on other more profitable
projects. Further, California’s court systems are
notoriously overwhelmed. To mitigate this, the
Commission recommends the state create in each
county a housing ombudsman who has the authority
to approve affordable housing projects until a
noncompliant locality is recertified. Because there are several hundred jurisdictions throughout California
that can add their own building requirements to
the state’s, these ombudsmen should be required
to adhere only to the statewide codes set by
the California Building Standards Commission.

Exceptions can be made for evidence-based local
codes proven indispensable for health and safety.

The state lacks the tools it
needs to effectively enforce
housing elements.

HCD has long enforced housing elements by writing
letters to cities cautioning them that their actions
might violate state housing law. It largely has relied
on third parties to inform it of violations. The state
may sue localities violating its housing requirements.

However it has only done so once in the past decade.

Consequently, the Commission recommends the
department’s newly-created Housing Accountability
Unit develop reasonable standards for when the
state should sue noncompliant localities. The state
should focus its enforcement on jurisdictions whose
annual rates of permitting are lagging. Whether
a jurisdiction is lagging should be determined by
comparing their permitting rate to their assigned
targets, and by statistical models that use
comparable jurisdictions to predict an approval
rate.48
CALIFORNIA HOUSING: BUILDING A MORE AFFORDABLE FUTURE | 19 Recommendation 7
To help lower- and middle-income Californians
become homeowners, prevent displacement, and
preserve its affordable housing investments, the
state should invest in shared equity models such
as community land trusts. As part of this effort,
California should:
◊ Place a particular emphasis on the
participation of individuals from groups
historically excluded from home ownership.
◊ Tax all resale-restricted housing at the resale-
restricted value.
◊ Require state-funded shared equity housing
to be sold below market value in order to
preserve the state’s affordable housing
investment.

Groups that historically have been excluded from
home ownership or forced into low-value areas are
hit particularly hard by California’s high housing costs because they have been denied the generational
wealth-building opportunities afforded to other
Californians.

The state’s racist history regarding home and
property ownership is plain. One example is
Berkeley’s adoption of the state’s first single-family
home zoning law. In the early 1900s, developer
Duncan McDuffie built neighborhoods with racial
covenants that prohibited people of color, a common
practice at the time. He worried about people of
color moving to nearby neighborhoods without such
restrictions, and was alarmed at the prospect of a
black-owned dance hall moving to the area, as it likely would attract black people. Working with like-minded
civic leaders, in 1916, he successfully pushed for his
city to adopt a single-family zoning law. That measure
kept the dance hall out. Because racism artificially
depressed the wages of non-white workers, prices for
single-family homes were above what most people
of color could afford, thus the zoning also effectively limited certain areas to white residents.49 (In 2021,
Berkeley voted to eliminate single-family zoning.)
Government-sanctioned racism has been the norm
since statehood, not the exception. Early laws
barred Asian people from owning land. Redlining
effectively limited the availability of mortgages to
predominantly white areas. The state constitution
was changed to allow communities to vote on
whether publicly-funded low-income housing may be
constructed there. In these and other ways, people of
color have long been denied equal housing access in
California. Many laws were changed in the aftermath
of the civil rights movement to remove explicitly
racist language from housing statutes, but racism
persisted in practice: Real estate agents directed
buyers and renters to the “right” neighborhoods;
lenders targeted people of color during the subprime
mortgage crisis; and even today there is evidence
that black-owned homes are appraised lower than
white-owned homes when all else is held constant.50
Today, about 63 percent of non-Hispanic white
families own their home in California, compared to
36 percent of black households.51
The state can make housing accessible to a greater
share of Californians by investing in shared
equity housing. In this model, the government or
a nonprofit subsidizes the purchase of a home,
allowing lower-income buyers to buy a home without
taking on the risky mortgages that preceded the 2008
housing crash. In return, buyers agree to share a
percentage of the home’s equity with the agency or
nonprofit that helped them purchase it. The contract
between homebuyers and subsidizers delineates
the formula that determines the resale value of the
home. For example, the resell value of the home may
increase by three percent a year, with a homebuyer
receiving a larger percentage if they make capital
improvements.

A critical benefit of the shared equity model is that it can help prevent displacement through gentrification
20 | LITTLE HOOVER COMMISSION
Community Land Trusts:

One Model of Permanent
Affordable Housing
Community Land Trusts (CLTs) tackle the
most expensive component in California
homebuilding: land. A nonprofit or government
organization buys land, puts it into a trust, then
sells the homes on the land for below-market
value. The buyer agrees to resell it at a below-
market rate. The land underneath the home
remains the property of the trust, which offers
low-cost leases to homeowners. Homeowners
typically are required to participate in the CLT’s
governance.

CLTs are being used in innovative ways. Los
Angeles-based Fideicomiso Comunitario Tierra
Libre helps residents in Boyle Heights and
East Los Angeles at risk of being displaced.

Working with nonprofits, residents created
the CLT, which has purchased empty lots and
a multifamily building for affordable housing.

Working with four other Los Angeles-area CLTs,
they won $14 million from a Los Angeles CLT
pilot program to expand their work. In addition
to empowering residents to stay in their
community, the CLT has helped residents have a
voice in their community’s future.

CLTs offer other opportunities. The Irvine
Community Land Trust helps the city meet
climate change goals: It is building expensive
infill housing designed to be affordable and
environmentally sustainable. A portion of
this housing is reserved to help Californians
experiencing homelessness and mental
illness. In Florida, the Florida Keys Community
Land Trust acquires properties destroyed in
Hurricane Irma, and builds homes designed
to withstand future hurricanes on them. This
could be a model for recovery following natural
disasters in California.

Californians should be proud of how CLTs
already are working to extend homeownership
to people traditionally excluded from those
opportunities: Nearly 80 percent of CLT
participants in California are people of color.

The success of resale-restricted housing
depends on taxes that reflect how much the
home can be sold for instead of the market
value of nearby properties. Legislation largely
has focused on reducing the tax burden for CLTs
serving low- and moderate-income people. The
Commission commends this step but believes
the state must go further. Given California’s
housing costs, many people whose earnings
exceed the definition of moderate income
cannot afford a home and would benefit from a
shared-equity model with appropriate tax relief.

We recommend limiting the tax burden to the
resale-restricted rates of all applicable shared-
equity models, not just CLTs serving low- and
moderate-income people.

Sources: Fanny Ortiz, Co-Founder and Board Member,
Fideicomiso Comunitario Tierra Libre, and Treasurer,
California Community Land Trust Network. August 26, 2021.

Testimony to the Commission. Also, Leo Goldberg, Co-Director, California Community Land Trust Network. August 23, 2021.

Phone call with Commission staff. Also, Katherine McKeen.

February 17, 2021. “Community Land Trusts Get a California Makeover.” University of Pennsylvania Law School. https:// www.theregreview.org/2021/02/17/mckeen-community-land-
trusts-get-california-makeover/. Accessed February 23, 2022.

Also, Jessica Grannis. March 2020. “Community-Driven Climate Solutions: How Public-Private Partnerships with Land Trusts Can Advance Climate Action.” William and Mary Environmental Law and Policy Review 44:3 (2019-20). Pages 701-744.

CALIFORNIA HOUSING: BUILDING A MORE AFFORDABLE FUTURE | 21 pressures by helping residents purchase homes in
the neighborhood in which they already live. Not
coincidentally, these are the same neighborhoods
where many historically-excluded Californians
reside.52
Often, homeowners who receive government
assistance in purchasing their home later sell it at
the market rate. To ensure the sustainability of its
affordable housing investments, the state should
specifically invest in shared equity models that
require the unit be sold at below-market prices.

Further, the state should require these units to be
taxed at their resale-restricted value; it does no good to assist a lower-income Californian to purchase
a home in an expensive metropolitan area if they
receive a tax bill for the market value of the home.

Finally, the state must take care to ensure that these
opportunities are presented to those who have
previously been hurt by discriminatory policies and
practices. While we cannot change the past, we do
have the power to change the present and future if
we so choose.

Conclusion
California does not have enough homes to safely
house all of its residents. As a consequence of this
limited supply, market-rate homes are unattainable
for many Californians.

To some degree, this limited supply is a result of
increased demand caused by decades of population
growth. It is also sometimes the result of natural
conditions, such as limitations to the water supply
or the fact that many large metropolitan areas in
California are near the ocean and/or mountains.

But the high cost of housing also is the result of
policy choices. Examples include California’s 1978
Proposition 13, which limits property taxes for
homeowners. In effect, the initiative stripped local
governments of revenue needed to provide the
services their constituents still demanded. One
result? Local governments impose development
fees on new construction, in some cases adding six
figures to the cost of each unit.53 Another example is
CEQA, created to protect California’s environment. It
has been weaponized by some not to protect critical
habitats, but to prevent construction that they would
find annoying.

Other factors also limit the availability of affordable housing. Worldwide, corporations are buying homes,
often in large lots, that they can later rent or flip.

A first-time homebuyer, often cobbling together
financing from a variety of sources that could fall
through, isn’t as attractive to sellers as a large
corporation offering cash.

The cumulative impact of such laws, policies, and
behavior, plus conditions outside of Californians’
control, is that developers cannot build homes that
the median-income Californian can afford – even if
they were willing to sell at cost.

Finally, Californians themselves impede the
availability of affordable housing. Often referred
to as NIMBYs, meaning not in my backyard, these
Californians – typically existing homeowners –
bemoan the state’s housing shortage but actively
oppose new development, particularly the affordable
kind, in their community. Some concerns deserve
serious attention, such as whether a community’s
infrastructure can keep pace with an expanding
population. Others are barely-concealed bigotry
and selfishness. Homeowners often oppose more
housing as they watch their own property values
increase due to limited supply. Still other people
prefer their community exactly as it is. They do not
see it as their problem if the teachers, utility workers, nurses, firefighters, and myriad others who serve
their community are not able to live there.

It is, however, their problem. It is one for all
Californians.
22 | LITTLE HOOVER COMMISSION
Notes

1. California Department of Housing and
Community Development, Division of Housing
Policy. February 2018. “California’s Housing
Future: Challenges and Opportunities Final
Statewide Housing Assessment 2025.” Page 5.
https://www.hcd.ca.gov/policy-research/plans-
reports/docs/sha_final_combined.pdf. Accessed
February 17, 2022. Also, McKinsey & Company,
McKinsey Global Institute. October 2016. “A Tool
Kit to Close California’s Housing Gap: 3.5 Million
Homes by 2025.” https://www.mckinsey.com/
featured-insights/urbanization/closing-californias-
housing-gap. Accessed February 17, 2022.

2. California Department of Housing and
Community Development, Division of Housing
Policy. February 2018. “California’s Housing
Future: Challenges and Opportunities Final
Statewide Housing Assessment 2025.” Page 3.
https://www.hcd.ca.gov/policy-research/plans-
reports/docs/sha_final_combined.pdf. Accessed
February 17, 2022.

3. United States Census Bureau. September 14,
2021. “Percentage of People in Poverty by State
Using 2- and 3-Year Averages: 2017-2018 and
2019-2020.” https://www2.census.gov/programs-
surveys/demo/tables/p60/273/PercentageInPov_
state.xlsx. Accessed February 17, 2022. Part of
Income and Poverty in the United States: 2020.

Available at https://www.census.gov/library/
publications/2021/demo/p60-273.html.

4. Dan Walters. September 20, 2020. “High Housing
Costs Keep Californians Poor.” CalMatters.
https://calmatters.org/commentary/2020/09/
high-housing-costs-californians-poor-poverty/.

Accessed February 17, 2022. Also, United
States Census Bureau. September 2020. “The
Supplemental Poverty Measure: 2019. Appendix
Table 5: Number and Percentage of People in
Poverty by State Using 3-Year Average Over:
2017, 2018, 2019.” P60-272. Page 29. https://
www.census.gov/content/dam/Census/library/
publications/2020/demo/p60-272.pdf. Accessed
February 17, 2022. Also, Sara Kimberlin and
Esi Hutchful. California Budget & Policy Center.

September 2019. Updated October 2019. “New
Census Figures Show Many Californians Struggle
to Afford Basic Needs.” https://calbudgetcenter.
org/resources/new-census-figures-show-many-
californians-struggle-to-afford-basic-needs/.

Accessed February 17, 2022.

5. Dan Walters. September 20, 2020. “High Housing
Costs Keep Californians Poor.” CalMatters.
https://calmatters.org/commentary/2020/09/
high-housing-costs-californians-poor-poverty/.

Accessed February 17, 2022. Also, SoFi. December
2021. “Cost of Living in California.” https://www.
sofi.com/cost-of-living-in-california/. Accessed
February 17, 2022. Based on data from The
Council for Community and Economic Research.

ACCRA Cost of Living Index. https://www.coli.org/
(Paywall).

6. California State Auditor. November 2020.
“California’s Housing Agencies.” Report 2020-
108. Page 9, Figure 3. http://auditor.ca.gov/pdfs/
reports/2020-108.pdf. Accessed February 17,
2022.

7. Sarah Bohn and Caroline Danielson. Public Policy
Institute of California. November 2017. “Reducing
Child Poverty in California: A Look at Housing
Costs, Wages, and the Safety Net.” Page 5. https://
www.ppic.org/wp-content/uploads/r_1117sbr.
pdf. Accessed February 17, 2022.

8. At current minimum wage of $15 per hour and an
8-hour workday.

9. During the pandemic, crowded conditions have
posed a health risk for families, especially for low-
income people and people of color, who often
live in the most crowded conditions.

CALIFORNIA HOUSING: BUILDING A MORE AFFORDABLE FUTURE | 23

10. Denise Pinkston, Founder and President, The
Casita Coalition, and Partner, TMG Partners.

August 26, 2021. Written testimony to the
Commission. Page 9. Available on Commission
website.

11. Debbie Arakel, Executive Director, Habitat for
Humanity. August 26, 2021. Written testimony
to the Commission. Page 10. Available on
Commission website. Homelessness data
from the United States Interagency Council
on Homelessness. “California Homelessness
Statistics.” https://tinyurl.com/mr3hnr25.

Accessed February 17, 2022.

12. Legislative Analyst’s Office. March 17, 2015.
“California’s High Housing Costs: Causes and
Consequences.” Page 15. https://lao.ca.gov/
reports/2015/finance/housing-costs/housing-
costs.pdf. Accessed February 17, 2022.

13. Office of Governor Gavin Newsom. January 15,
2019. “Governor Newsom Unveils Proposals to
Tackle Housing Affordability Crisis.” https://www.
gov.ca.gov/2019/01/15/housing-affordability-
crisis/. Accessed February 17, 2022. Also,
Governor Gavin Newsom. January 15, 2019.

Executive Order N-06-19. https://www.gov.ca.gov/
wp-content/uploads/2019/01/EO-N-06-19.pdf.

Accessed February 17, 2022.

14. California Department of Finance. Enacted
California Budget 2019-20. Budget Summary:

Housing and Local Government. Pages 73-74.
https://ebudget.ca.gov/2019-20/pdf/Enacted/
BudgetSummary/HousingandLocalGovernment.
pdf. Accessed February 17, 2022.

15. California Department of Finance. Enacted
California Budget 2021-22. Budget Summary:

Housing and Homelessness. Pages 93-96.
https://ebudget.ca.gov/2021-22/pdf/Enacted/
BudgetSummary/HousingandHomelessness.pdf.

Accessed February 17, 2022.

16. California Department of Finance. Governor’s
Proposed California Budget 2022-23. Budget
Summary: Housing and Homelessness. Pages
142-145. https://ebudget.ca.gov/2022-23/pdf/
BudgetSummary/HousingandHomelessness.pdf.

Accessed February 17, 2022.

17. Debbie Arakel, Executive Director, Habitat for
Humanity. August 26, 2021. Written testimony
to the Commission. Page 6. Available on
Commission website.

18. Debbie Arakel, Executive Director, Habitat for
Humanity. August 26, 2021. Written testimony
to the Commission. Page 10. Available on
Commission website.

19. Federal Reserve Bulletin. September 2020. Vol.
106, No. 5. “Changes in U.S. Family Finances
from 2016 to 2019: Evidence from the Survey of
Consumer Finances.” Page 11, Table 2. https://
www.federalreserve.gov/publications/files/scf20.
pdf. Accessed February 17, 2022.

20. Debbie Arakel, Executive Director, Habitat for
Humanity. August 26, 2021. Written testimony
to the Commission. Page 6. Available on
Commission website. Also, Joint Center for
Housing Studies of Harvard University. “The
State of the Nation’s Housing 2015.” Page 17.
https://www.jchs.harvard.edu/sites/default/files/
media/imp/jchs-sonhr-2015-full_0.pdf. Accessed
February 17, 2022.

21. California State Auditor. November 2020.
“California’s Housing Agencies.” Report 2020-108.

Page 10 ends

reports/2020-108.pdf. Accessed February 17,
2022. Number of households data available at
the United States Census Bureau. “Quick Facts:

California.” Population Estimates, July 1, 2021
(V2021). https://www.census.gov/quickfacts/CA.

Accessed February 17, 2022.
24 | LITTLE HOOVER COMMISSION

22. California State Auditor. November 2020.
“California’s Housing Agencies.” Report 2020-108.

Page 10 ends

reports/2020-108.pdf. Accessed February 17,
2022.

23. Legislative Analyst’s Office. March 17, 2015.
“California’s High Housing Costs: Causes and
Consequences.” Page 27. https://lao.ca.gov/
reports/2015/finance/housing-costs/housing-
costs.pdf. Accessed February 17, 2022.

24. Debbie Arakel, Executive Director, Habitat for
Humanity. August 26, 2021. Written testimony
to the Commission. Page 7. Available on
Commission website.

25. Claudia Cappio, Former Local Planning Official
and Former Director, California Housing Finance
Agency and Former Director, Housing and
Community Development (2011-2015). Written
testimony to the Commission. Page 2. Available
on Commission website.

26. Debbie Arakel, Executive Director, Habitat for
Humanity. August 26, 2021. Written testimony
to the Commission. Page 11 Available on
Commission website.

27. Examples include: California Global Warming
Solutions Act of 2006 (AB 32), Chapter 488,
Statutes of 2006. https://leginfo.legislature.
ca.gov/faces/billTextClient.xhtml?bill_
id=200520060AB32. Accessed February 17, 2022.

Sustainable Communities Strategies (SB 375),
Chapter 728, Statutes of 2008. https://leginfo.
legislature.ca.gov/faces/billTextClient.xhtml?bill_
id=200720080SB375. Accessed February 17,
2022.

28. Denise Pinkston, Founder and President, The
Casita Coalition, and Partner, TMG Partners.

August 26, 2021. Written testimony to the
Commission. Pages 5-6. Available on Commission
website.

29. Paavo Monkkonen and Spike Friedman,
University of California, Los Angeles. February
2019. “Not Nearly Enough: California Lacks
Capacity to Meet Lofty Housing Goals.” Page 3.
https://www.lewis.ucla.edu/research/california-
lacks-capacity-to-meet-lofty-housing-goals/.

Accessed February 17, 2022.

30. Claudia Cappio, Former Local Planning Official
and Former Director, California Housing Finance
Agency and Former Director, Housing and
Community Development (2011-2015). Written
testimony to the Commission. Pages 1-2.

Available on Commission website.

31. Governor Gavin Newsom. March 22, 2019.
“Proclamation of a State of Emergency.”
https://www.gov.ca.gov/wp-content/
uploads/2019/03/3.22.19-Wildfire-State-of-
Emergency.pdf. Accessed February 17, 2022.

32. There is controversy around whether those 35
projects met the Governor’s stated goals of acres
to be treated, though it is clear they did not. This
is why the Commission recommends a realistic
number of projects in a realistic timeframe. It
should be noted that those projects did meet
their intended goal of protecting communities
from wildfire. Capital Public Radio provides an
excellent summary of the controversy here:
https://www.capradio.org/articles/2021/06/23/
newsom-misled-the-public-about-wildfire-
prevention-efforts-ahead-of-worst-fire-season-
on-record/.

33. Terner Center for Housing Innovation, University
of California, Berkeley. March 20, 2020. The Cost
of Building Housing Series. https://ternercenter.
berkeley.edu/research-and-policy/the-cost-of-
building-housing-series/. Accessed February 17,
2022.

34. Denise Pinkston, Founder and President, The
Casita Coalition, and Partner, TMG Partners.

CALIFORNIA HOUSING: BUILDING A MORE AFFORDABLE FUTURE | 25 August 26, 2021. Written testimony to the
Commission. Page 13. Available on Commission
website.

35. Terner Center for Housing Innovation, University
of California, Berkeley. March 2018. “It All Adds
Up: The Cost of Housing Development Fees
in Seven California Cities.” Page 11. https://
ternercenter.berkeley.edu/wp-content/uploads/
pdfs/Development_Fees_Report_Final_2.pdf.

Accessed February 17, 2022.

36. Terner Center for Housing Innovation, University
of California, Berkeley. March 2018. “It All Adds
Up: The Cost of Housing Development Fees
in Seven California Cities.” Page 3. https://
ternercenter.berkeley.edu/wp-content/uploads/
pdfs/Development_Fees_Report_Final_2.pdf.

Accessed February 17, 2022.

37. Peter Whoriskey, Spencer Woodman, and Margot
Gibbs. December 15, 2021. “This Block Used to Be
for First-Time Homebuyers. Then Global Investors
Bought In.” Washington Post. https://www.
washingtonpost.com/business/interactive/2021/
investors-rental-foreclosure/. Accessed February
17, 2022.

38. Stan Oklobdzija. February 24, 2021. “Institutional
Investors in California Housing Markets.” https://
cayimby.org/institutional-investors-in-california-
housing-markets/. Accessed February 17, 2022.

39. AB 354 (Calderon). 2017-18. https://leginfo.
legislature.ca.gov/faces/billTextClient.xhtml?bill_
id=201720180AB354. Accessed February 17,
2022.

40. Governor Edmund G. Brown Jr. September 27,
2018. Veto Message. https://www.ca.gov/archive/
gov39/wp-content/uploads/2018/09/AB-354-Veto.
pdf. Accessed February 17, 2022.

41. AB 1199 (Gipson). 2021. https://leginfo.
legislature.ca.gov/faces/billNavClient.xhtml?bill_
id=202120220AB1199. Accessed February 17,
2022.

42. Ben Metcalf, Managing Director, Terner Center
for Housing Innovation, University of California,
Berkeley. September 23, 2021. Written testimony
to the Commission. Page 3.

43. Ben Metcalf, Managing Director, Terner Center
for Housing Innovation, University of California,
Berkeley. September 23, 2021. Written testimony
to the Commission. Pages 2-3.

44. Ben Metcalf, Managing Director, Terner Center
for Housing Innovation, University of California,
Berkeley. September 23, 2021. Written testimony
to the Commission. Pages 2-3.

45. Ben Metcalf, Managing Director, Terner Center
for Housing Innovation, University of California,
Berkeley. September 23, 2021. Written testimony
to the Commission. Pages 2-3.

46. Ben Metcalf, Managing Director, Terner Center
for Housing Innovation, University of California,
Berkeley. September 23, 2021. Written testimony
to the Commission. Page 1.

47. AB 1350 (Friedman). 2017. https://leginfo.
legislature.ca.gov/faces/billTextClient.xhtml?bill_
id=201720180AB1350. Accessed February 17,
2022.

48. Ben Metcalf, Managing Director, Terner Center
for Housing Innovation, University of California,
Berkeley. September 23, 2021. Written testimony
to the Commission. Page 3.

49. Erin Baldassari and Molly Solomon. October
5, 2020. “The Racist History of Single-Family
Home Zoning.” KQED. https://www.kqed.org/
news/11840548/the-racist-history-of-single-
family-home-zoning. Accessed February 17, 2022.
26 | LITTLE HOOVER COMMISSION

50. Andre Perry, Jonathan Rothwell, and David
Harshbarger. November 2018. “The Devaluation
of Assets in Black Neighborhoods.” The Brookings
Institute. https://www.brookings.edu/wp-content/
uploads/2018/11/2018.11_Brookings-Metro_
Devaluation-Assets-Black-Neighborhoods_final.
pdf. Accessed August 10, 2021.

51. Manuela Tobias. May 17, 2021. “What California
Lawmakers Could Do To Boost Homeownership
For Black Families.” CalMatters. https://www.
capradio.org/articles/2021/05/17/what-california-
lawmakers-could-do-to-boost-homeownership-
for-black-families/. Accessed August 10, 2021.

52. U.S. Department of Housing and Urban
Development's (HUD's) Office of Policy
Development and Research. Fall 2012. https://
www.huduser.gov/portal/periodicals/em/fall12/
highlight3.html. Accessed February 17, 2022.

53. Terner Center for Housing Innovation, University
of California, Berkeley. March 2018. “It All Adds
Up: The Cost of Housing Development Fees
in Seven California Cities.” Page 3. https://
ternercenter.berkeley.edu/wp-content/uploads/
pdfs/Development_Fees_Report_Final_2.pdf.

Accessed February 17, 2022.

CALIFORNIA HOUSING: BUILDING A MORE AFFORDABLE FUTURE | 27 Little Hoover Commission Members
CHAIRMAN PEDRO NAVA | Santa Barbara
Appointed to the Commission by Speaker of the Assembly
John Pérez in April 2013 and reappointed by Speaker
of the Assembly Anthony Rendon in 2017 and again
in 2021. Government relations advisor. Former State
Assemblymember from 2004 to 2010, civil litigator,
deputy district attorney and member of the state Coastal Commission. Elected chair of the Commission in March
2014.

VICE CHAIRMAN SEAN VARNER | Riverside
Appointed to the Commission by Governor Edmund G.

Brown Jr. in April 2016 and reappointed in January 2018.

Managing partner at Varner & Brandt LLP where he
practices as a transactional attorney focusing on mergers and acquisitions, finance, real estate, and general counsel work. Elected vice chair of the Commission in March 2017.

DION ARONER | Berkeley
Appointed to the Commission by the Senate Rules
Committee in April 2019. Partner for Aroner, Jewel, and Ellis. Former State Assemblymember from 1996 to 2002,
chief of staff for Assemblymember Tom Bates, social
worker for Alameda County, and the first female president of Service Employees International Union 535.

DAVID BEIER | San Francisco
Appointed to the Commission by Governor Edmund G.

Brown Jr. in June 2014 and reappointed in January 2018.

Managing director of Bay City Capital. Former senior officer of Genentech and Amgen, and counsel to the U.S. House of Representatives Committee on the Judiciary.

ASM. TASHA BOERNER HORVATH | Encinitas
Appointed to the Commission by Speaker of the Assembly
Anthony Rendon in October 2021. Elected in November
2018 to represent the 76th Assembly District. Represents Camp Pendleton, Oceanside, Vista, Carlsbad, and Encinitas.

CYNTHIA BUIZA | Los Angeles
Appointed to the Commission by Speaker of the Assembly
Anthony Rendon in October 2018. Executive director of the California Immigrant Policy Center. Former policy director for the American Civil Liberties Union, San Diego, and
policy and advocacy director at the Coalition for Humane Immigrant Rights of Los Angeles.

ANTHONY CANNELLA | Ceres
Appointed to the Commission by the Senate Rules
Committee in March 2022. Civil engineer and principal with Northstar Engineering Group. Former State Senator from
2010 to 2018. Previously served on the Ceres City Council and was twice elected mayor of that city.

ASM. PHILLIP CHEN | Yorba Linda
Appointed to the Commission by Speaker of the Assembly
Anthony Rendon in October 2021. Elected in November
2016 to represent 55th District. Represents portions of Los Angeles, Orange and San Bernardino counties and the
cities of Brea, Chino Hills, Diamond Bar, La Habra, Industry, Placentia, Rowland Heights, Walnut, West Covina and Yorba Linda.

BILL EMMERSON | Redlands
Appointed to the Commission by Governor Edmund G.

Brown Jr. in December 2018. Former senior vice president of state relations and advocacy at the California Hospital Association, State Senator from 2010 to 2013, State
Assemblymember from 2004 to 2010, and orthodonist.

GIL GARCETTI | LOS ANGELES
Appointed to the Commission by Governor Gavin Newsom
in November 2021. Professional photographer and author
of ten books. Former Los Angeles County District Attorney, teaching Fellow at Harvard University’s Kennedy School, and president of the California Science Center Foundation’s Board of Trustees.

SEN. DAVE MIN | Irvine
Appointed to the Commission by the Senate Rules
Committee in September 2021. Elected in November 2020
to represent the 37th Senate District. Represents Anaheim Hills, Costa Mesa, Huntington Beach, Irvine, Laguna Beach, Laguna Woods, Lake Forest, Newport Beach, Orange,
Tustin, and Villa Park.

SEN. JIM NIELSEN | Gerber
Appointed to the Commission by the Senate Rules
Committee in March 2019. Elected in January 2013 to
represent the 4th Senate District. Represents Chico, Oroville, Paradise, Red Bluff, Yuba City, and surrounding areas.

JANNA SIDLEY | Los Angeles
Appointed to the Commission by Governor Edmund
G. Brown Jr. in April 2016 and reappointed in February
2020. General counsel at the Port of Los Angeles since
2013. Former deputy city attorney at the Los Angeles City Attorney’s Office from 2003 to 2013.

Full biographies are available on the Commission’s
website at www.lhc.ca.gov.

Milton Marks Commission on California State
Government Organization and Economy
www.lhc.ca.gov
“DEMOCRACY ITSELF IS A PROCESS OF CHANGE, AND

SATISFACTION AND COMPLACENCY ARE ENEMIES OF
GOOD GOVERNMENT.”
By Governor Edmund G. “Pat” Brown,
addressing the inaugural meeting of the Little Hoover Commission, April 24,1962, Sacramento, California

CITY COUNCIL
Law & Regulation Committee
CC #:
1983
File #:
0103-32-02
Title:

Electric Department Priority Legislation - March 2022
Contact:

Amber Blixt 916-774-5693 [email protected]

Meeting Date: 3/23/2022
Item #: 6.2.

RECOMMENDATION TO COUNCIL
Discuss and provide input on any state or federal legislation presented to the committee.

BACKGROUND
Staff has been reviewing key energy legislation introduced in 2021 and 2022 to determine potential impacts to the Electric Department. Below is a list of key bills and related regulatory items that staff has been monitoring:

State Legislation:

AB 2061 (Ting, Reyes) Transportation Electrification: Electric Vehicle Charging Infrastructure. (Watch)
– Beginning July 1, 2023, those that receive incentive funding by a state agency to own or operate a charging station will be required to report charging station “uptime” to the California Energy Commission every 12 months over a 12-month rolling basis. “Uptime” is the charging station being online and available for use, or in use, and dispensing electricity at the intended power level. Beginning January 1, 2025, the Commission will assess the uptime of public and ratepayer-funded charging station infrastructure to identify if there are differences in uptime by population density, geographical area, or population income level. If the assessment indicates an issue, the Energy Commission will consider adopting tools to increase charging station uptime, including uptime requirements or incentives.

Staff comments: The proposal in
this bill would be a new requirement for Roseville Electric, as we currently do not report on “uptime” for our chargers right now. However, it does not appear that Roseville receives any funding, as currently defined in this bill, from a state agency to own or operate charging stations.

Accordingly, this bill is inapplicable to us at this time. As a practical matter, Roseville Electric does not have visibility to all the chargers that we incentivize or fund which would make reporting on the “uptime” of these units difficult if not impossible.

Staff will continue to monitor this bill to ensure that the scope does not expand to apply to programs where we do participate.

AB 2696 (E.Garcia) Electricity: Renewable Energy and Zero-Carbon Resources: State Policy: Transmission Planning. (Watch)
– This bill requires the Energy Commission to
conduct a study to review potential lower cost ownership and alternative financing mechanisms for new transmission facilities needed to meet the state’s clean energy and climate targets, including but not limited to, public ownership, public financing and partnerships with federal agencies.

Where an electrical corporation has applied for a certificate authorizing the construction of new transmission facilities, this bill requires that the California Public Utilities Commission (CPUC) find that the present or future public convenience and necessity require construction if the new facility will facilitate achievement of the state’s 100% renewable energy/zero carbon goals by 2045.

Staff
comments: The City is watching this bill as new transmission to meet the state’s clean energy goals is becoming a high priority in this year’s legislative session.

A recent
report by the California Independent System Operator (CAISO) estimates an additional $30 billion in transmission investments needed to support the state’s clean energy goals.

While this bill supports looking at different ownership models to support transmission development, it may also result in an easier CPUC approval process of transmission projects, which could raise cost concerns for other utilities in the future.

Roseville is significantly insulated from these cost increases for the time being and supports future transmission system improvements that ensure cost allocation is born by the parties that stand to benefit from those improvements. The Department will continue to monitor this legislation for any potential negative cost implications to the City.

SB 1112 (Becker) – Energy Suppliers: Notice and Recordation of a Decarbonization Charge. (Watch)
-

This bill would establish transparency for renters and homebuyers by requiring that a utility who engages in tariffed on-bill (TOB) financing notify their county recorder of a decarbonization upgrade made in a home, and subsequent charges the occupant of the home will incur because of the upgrade. The TOB model allows customers to make upgrades in their residence through utility investment, for which cost recovery is tied to the utility meter. This tariff charge remains attached to the meter at the residence, regardless of who occupies the property, until utility cost recovery is complete. The intention of this type of investment is to enable the electric utility to offer access to capital to its customers.

Staff comments: Currently, utilities in
California do not offer tariffed on-bill financing programs to customers. However, the CPUC has begun an open proceeding, which may allow customers to have access to tariffed on-bill financing for climate beneficial appliances in the future. Accordingly, there needs to be clarity in the law regarding how to ensure proper notification to successor customers about bill charges when there is a change in home ownership or tenancy.

If publicly owned utilities also begin offering this kind of financing, these notification requirements would apply.

This bill could ultimately increase additional
department staff resources in order to satisfy the bill’s reporting requirements to notify the county recorder of a decarbonization upgrade made in a home, and subsequent charges the occupant of the home will incur because of the upgrade. However, the department generally supports these transparency measures as a way to keep customers informed about the products they are purchasing as part of the home buying and rental process.

SB 1158 (Becker) Retail Electricity Suppliers: Greenhouse Gas Emissions: Integrated Resource Plans. (Watch)
–
This bill sets up new parameters for how utilities report their annual power sources as part of the power source disclosure (PSD) program. SB 1158 requires disclosure of purchases of electricity from specified sources based on retail load instead of the current model, which uses annual sales. It also requires the CEC to adopt by January 1, 2024 guidelines regarding the reporting and disclosure of electricity sources by hour. SB 1158 requires a POU to disclose the portion of its Resource Adequacy requirement that was met with capacity from renewable energy resources or other zero-carbon resources. SB 1158 requires retail suppliers by January 1, 2025 to report annual GHG emissions associated with all electricity.

Finally, the bill requires that the Governing board of the Publicly Owned Utility (POU) review the Power Source Disclosure data to determine whether the POU is making progress in achieving the sector’s greenhouse gas emission reduction targets, or whether changes are required to achieve those targets.

Staff comments: At this point, the department is unclear why these changes to the power source disclosure program are necessary or warranted. In particular, the new hourly and resource adequacy reporting requirements are the most concerning because they have the potential to be the most burdensome from a reporting and staff time perspective. The power content label is currently used as a way to inform our customers about the power they receive; however, this proposal is moving to a more difficult and technical standard that may be more confusing than helpful for general consumption. Staff will continue to find out more about the need for this bill and report any new information to the committee.

SB 1376 (Stern) State Energy Resources Conservation and Development Commission:

Strategic Plan: Zero-Carbon Resources. (Watch)
-

This bill requires the California Energy
Commission to adopt a strategic plan on or before November 1, 2023, to enable no less than six gigawatts per year of zero-carbon resources to be interconnected to the state’s electrical grid, beginning on January 1, 2025. The bill would require the plan to identify and recommend actions required to streamline interconnection into the state’s electrical grid and implement investments needed to ensure reliability and meet future growth in electrical load and generation.

This strategic
plan is to be included in the Integrated Energy Policy Report adopted by the Commission by November 1, 2023.

Staff comments:

The Department is concerned that SB 1376 sets up
yet another planning process for utilities to follow in terms of meeting the existing clean energy goals.

Utilities need time to implement the goals that are already in place before adding on additional layers of planning.

Moreover, staff is concerned that this bill or
the strategic plan that follows could include procurement mandates for utilities to meet in furtherance of the annual 6-gigawatt goal.

As it is early in the legislative process,
staff will continue to monitor the trajectory of this bill and watch for the inclusion of language, such as procurement mandates, that would be directly problematic for publicly owned utilities.

Regulatory:

State Water Resources Control Board (SWRCB) General Order: Electric Utility Operations and Maintenance Activities Related to Wildfire Mitigation and Other Similar Activities (Watch).

The SWRCB proposes to develop a General Order to facilitate a streamlined permitting process that protects the state’s water resources (e.g. wetlands, stream channels, and lakes) while utilities carry out wildfire mitigation efforts as required by SB 901 (Dodd, statutes of 2018). In addition, this General Order proposes to cover electric utility infrastructure operations and maintenance activities outside of wildfire mitigation activities that have the same potential effects on water quality. Examples of activities covered include vegetation management, system hardening, site access, staging areas and laydown yards, pole/tower repairs or replacement, substation maintenance, line re-conductoring, and undergrounding power lines.

Operations and maintenance activities must incorporate applicable protection measures, such as design guidelines or avoidance and minimization techniques, or other criteria into their project descriptions to meet the expected eligibility criteria in the proposed General Order. The SWRCB will be the lead agency for the California Environmental Quality Act (CEQA) process with a draft environmental impact report and general order expected in the spring of 2022 and proposed adoption in the winter of 2022/2023.

Staff comments: This regulation is in the introductory
stages of formation, but has potential implications for the utility, as it is not limited only to high fire threat districts and/or wildfire mitigation activities. Roseville performs vegetation management as part of our wildfire mitigation plan. This may be an area where Roseville is impacted under the General Order.

Roseville staff will continue to
engage and follow this process and inform the committee as the scope of this regulation becomes more fully developed.

Conclusion
Staff will continue to keep the committee apprised of these important legislative proposals and request any direction as needed.

FISCAL IMPACT
The costs of these activities are contained within the City’s current budget.

ECONOMIC DEVELOPMENT / JOBS CREATED
The activities detailed in this report will not result in job development or creation.

The action of reviewing legislation meets the above criteria and is not subject to CEQA. No additional environmental review is required.

Respectfully Submitted,
Amber Blixt, Utility Government Relations Administrator Dan Beans, Electric Utility Director

CITY COUNCIL
Law & Regulation Committee
CC #:
1984
File #:
0103-32-02
Title:

Environmental Utilities Priority Legislation - March 2022 Contact:

Noelle Mattock
916-774-5504
[email protected]

Meeting Date: 3/23/2022
Item #: 6.3.

RECOMMENDATION TO COUNCIL
This staff report provides updates to the Law and Regulation Committee on priorities outlined in the 2022 City of Roseville Legislative Platform. This includes state and federal legislative, regulatory, and other relevant activities being tracked and acted on by the Environmental Utilities Department (EU).

BACKGROUND
AB 1857 (Garcia) Solid Waste (Reviewing)
This measure would enact the Zero Waste Transition Act of 2022, which seeks to reduce the state's reliance on transformation facilities to building infrastructure to meet the state’s recycling goals and the state's 2025 organic waste reduction target.

Staff Comment: Staff is currently reviewing this measure to determine the impacts on Roseville’s ability to meet state mandated diversion goals. Initial concern is placing additional cost pressures on ratepayers.

AB 2157 (Rubio, B.) Urban Water Use Objectives: Indoor Residential Water Use (Watch) This measure currently states the intent to make changes to the residential indoor water use standards that are set in statute.

Staff Comment: In anticipation of Assemblywoman Friedman introducing legislation on this topic, the water industry was able to have Assemblywoman Blanca Rubio introduce this measure as a placeholder. Subsequently Senator Hertzberg, a co-author on the conservation legislation in 2018 introduced a bill on the indoor standard (SB 1157). At this time we believe SB 1157 (below) will be the measure that moves forward on this topic.

AB 2536 (Grayson) Development fees: Connection fees and capacity charges (Reviewing)
This measure, beginning January 1, 2023, places new requirements on local agencies imposing water and sewer connection fees or capacity charges. The measure sets forth a new requirement for a study before adoption of a fee or capacity charge. And, prescribes the information to be included in the study and the frequency to update the study. The new study is also to be approved during a public hearing of the governing body.

Staff Comment: Roseville is in the process of reviewing this measure to determine the impacts of these new requirements and whether the information and studies are appropriate to base our decisions on. At this time, our trade associations are taking a close look at this measure and seeking feedback.

SB 1010 (Skinner) Air Pollution: State fleet: Zero-emission vehicles (Watch) This measure would establish a timeline for the state to convert their fleet to zero emission vehicles.

Staff Comment: We are watching this measure to compare the standards being developed for the state versus the current regulations being proposed for the conversion of local government fleets.

SB 1157 (Hertzberg) Urban Water Use Objectives: Indoor Residential Water Use. (Oppose Unless Amended)
This measure proposes to amend the indoor water standards in 2025 and 2030 established with the passage of AB 1668 (Friedman) in 2018. This measure would set the new 2025 standard at 47 gallons per capita daily (GPCD) and 42 GPCD beginning in 2030.

Staff Comment: Last year this bill was authored by Assemblywoman Freidman. Roseville has been working as member of a coalition in opposition. As noted in last month’s Staff Report, the Department of Water Resources (DWR) has released their required study suggesting an indoor water use standard of 48 GPCD in 2025 and 42 GPCD in 2030, which mirrors the bill in print. After many coalition meetings, the water industry has decided to focus on the 2030 number and seek funding to help water agencies reach the 2025 indoor standard of 47 GPCD.

Roseville has raised and continues to push the very real concern on these standards because they did not contemplate or evaluate the impacts of COVID. During COVID many workers shifted to work from placing new demands on residential indoor that we expect to continue into the future.

FISCAL IMPACT
The costs of these activities are contained within the City’s current budget.

ECONOMIC DEVELOPMENT / JOBS CREATED
The activities contained in this report will not result in job development or creation.

Respectfully Submitted,
Noelle Mattock, Utility Government Relations Administrator Richard D. Plecker, P.E., Environmental Utilities Director

Law & Regulation CommitteeMarch 23, 2022

Law & Regulation Committee
March 23, 2022