Coming soon to a NIMBY city near you? Photo by Marek Minor on Unsplash
Recently, a developer submitted a plan to turn the waterfront power plant in Redondo Beach into 2,300 new homes using what’s called the Builder’s Remedy. This post is about what a Builder’s Remedy is and why it’s a big deal that California might have one.
Understanding the builder’s remedy requires going pretty deep into the structure of land-use regulation and the history of fair housing policy. I’ll try to keep this as simple as possible. Stay with me.
Here in America, land use and zoning policy is overwhelmingly set at the local level, with individual cities setting the rules about what can be built, where, and running their own processes for permitting development.
For a variety of reasons ranging from racism to municipal finance to plain old aversion to change, most cities, especially in the suburbs, are not particularly eager to welcome new housing, especially inexpensive apartments or subsidized low-income housing.
However, “local control” is not absolute. State governments recognize that cities should grow and that subsidized housing has to get built somewhere; so they have created policy frameworks to force cities to approve new housing, and subsidized housing in particular.
Though the specifics vary by state; there are two major approaches here: plan mandates, which are more popular on the west coast, especially California, and builder’s remedies, which are more prominent in the northeast, notably in Massachusetts.
Massachusetts’ builder’s remedy system is called 40B, after the state law that created it. Adopted in 1969 as a fair housing measure, it lets developers ignore local zoning and bypass local permitting processes if their projects include subsidized affordable housing. Specifically, in cities where less than 10% of the housing is affordable to low- and moderate-income households, developers can disregard local zoning if 20% of the units in their project are deed-restricted as income-limited housing.
This means that wealthy cities cannot use zoning to effectively ban inexpensive housing from within their borders, and ensures that people who work in these communities can afford to live in them and send their kids to the local schools.
In addition to permitting tens of thousands of subsidized affordable homes, 40B is a powerful tool that prevents affluent suburbs from using zoning to ban inexpensive market-rate housing. You can read more about 40B in this report from the Berkeley Terner Center for Housing Innovation.
Cities with exclusionary zoning HATE builders remedies; so some states have created a series of “safe harbor” provisions by which cities can avoid being subject to 40B by planning for affordable housing growth. This brings us to plan mandates!
California has a plan mandate system. Every eight years, the state requires that cities update the Housing Element of their General Plans and show that their zoning can accommodate population growth and that they have enough land available for subsidized low-income housing.
The state sets regional population growth targets through a process called the Regional Housing Needs Assessment, or RHNA (say “ree-na”). Each city is given targets for very low-, low-, moderate-, and above-moderate income housing, called its RHNA Allocation. You can see the SoCal cities’ RHNA allocations here.
Among other things, Housing Elements have to identify specific locations that are suitable for subsidized, low-income housing, identify constraints to housing production, and include plans to remove those constraints.
The California Department of Housing and Community Development (HCD) reviews every city’s Housing Element to make sure it does everything required by state law. HCD usually requires some revisions before “certifying” a city’s housing element as compliant.
In theory, this means cities have to change their zoning and permitting processes to allow apartments to get built. In practice, the Housing Element process has been largely toothless until very recently because the methodology was trash—last cycle, Beverly Hills’ RHNA allocation was *three* units—and because there were no real consequences for noncompliance: some cities do stuff like claim that their city halls would be redeveloped into hundreds of units of affordable housing, claim that their low-density zoning was not a constraint to development, or plan to “study” removing constraints. Other cities just didn’t bother filing them at all.
However, recent changes to state law have reformed and greatly strengthened the Housing Element process. We are now midway through the sixth “cycle” of updates and things are starting to get interesting.
For starters, the growth numbers are now more realistic—Beverly Hills now has to plan for more than three *thousand* units—and the housing is more fairly distributed: SCAG isn’t letting the coastal cities push all the growth to the Inland Empire this time. And the state is getting serious about compliance: HCD and the state Attorney General’s office have hired dozens of people to make sure cities follow state housing law. Further, cities without compliant housing elements risk losing out on a bunch of state money.
More tantalizingly, we are inching toward having a California version of the Builder’s Remedy tied to Housing Element compliance and progress toward meeting RHNA goals. This began in 2017, when the state passed SB 35, which creates a sort of Builder’s Remedy that says cities that are behind on meeting their RHNA goals must provide streamlined, by-right permits for 20% affordable projects. However, SB 35 projects have to conform to local zoning, which is a major constraint to getting projects built.
That said, UC Davis law professor Chris Elmendorf identified another Builder’s Remedy in the 1990 state Housing Accountability Act, which is tied to housing element certification. You can read his white paper on the topic here.
Here’s where Redondo Beach comes in. When the developer submitted his plans for those 2,300 homes by the water in Redondo, the city did not have a certified housing element.
Further, SB 330 means that the application can only be subjected to the rules that were in place when he filed it. (As an aside, Redondo Beach voters have to approve the housing element, so they may not fully be in compliance for years.)
This means that he may be able to get this project entitled, permitted, and built over the objections of the local government.
Nobody has ever actually used this Builder’s Remedy, likely because it will royally piss off local elected officials and most developers have no desire to enrage the people who have to sign off on their projects. As such, we genuinely do not know what is going to happen here.
But it’s very exciting for two reasons: first, it creates a potential pathway for lots of new housing, particularly in housing-averse cities like San Francisco. Second, it puts cities on notice that there will be serious consequences for failing to take the housing element process seriously.
Watch this space!
