The Elements of Housing Elements: A Phase Change to Greater Production?

Recent reforms to California’s Housing Element Law may change political incentives in municipal governments to permit more housing production as a default stance, with the cover of state regulators forcing their hand. That’s the compelling analysis offered by Elmendorf et al (2020), a team of legal and planning experts from UC Berkeley, UC Davis, and UCLA.

Key takeaways:

1. Policymakers have shifted the housing element framework away from a status-quo bias to what the authors term a “pro-housing default.” Failure to adopt a compliant housing element to advance regional housing goals removes local authority to deny projects with 20% below market-rate housing units.
2. The politics of local development may shift from a hyper-local focus on ad hoc negotiations over individual projects to citywide or regional goals.
3. Politicians under pressure from anti-growth neighborhood interests can ameliorate this inherent tension by establishing a “zoning budget” under the housing element framework, setting a baseline for zoned capacity citywide.

California cities are embarking on a two-year process to update their housing elements—a state mandated framework for aligning local land-use practices with regional housing needs. In the past, this mandate came with few consequences, if any. Cities could fail to obtain HCD certification and continue with the status quo. But business as usual is no longer an option: housing elements now have the force of law behind them. Such a seemingly simple change can have powerful downstream effects on the political economy of urban housing development.

There are several other vectors of reform at play in strengthening the housing element process. One of these is the accompanying Housing Accountability Act, which prohibits cities from denying permits for any project “consistent with the density specified in the housing element, even though it is inconsistent with both the jurisdiction’s zoning ordinance and general plan [emphasis added]…” The law also overrides local zoning laws if a city’s housing element isn’t certified. “While the city remains out of compliance, it must approve almost any proposed development in which at least 20% of the units would be affordable to low-income households, regardless of whether the project complies with local zoning,” Elmendorf et al explain.

Another vector is the state’s No Net Loss requirement, which bars cities from factoring in developable capacity on land that already has housing—in other words, demolishing homes—to meet their housing element. If a city fails to identify enough zoned capacity in its housing element to meet its regional housing needs, the city would have six months to rezone for more capacity, or potentially face decertification.

As Elmendorf et al note, the housing element is like a “constitution” for local land-use. Municipal zoning codes and permit approvals must conform to its provisions. This also shifts the locus of development politics away from a “piecemeal” project-by-project “haggling,” as the authors term it, to a citywide process that benefits the most vulnerable. While a citywide planning process would affect lower-income renters directly, it would not immediately raise the prospect of specific developments in particular places, and thus “since the citywide deal wouldn’t imminently result in development of any specific site, neighborhood interests will be less engaged.” In the authors’ thinking, the pro-housing default in the housing element process “inverts the pattern of participation one sees when land use decisions are made on an ad hoc, project-by-project basis.”

The standard of court-enforced housing elements that are “fundamental, mandatory, and clear,” the authors argue, could provide more trust in city councils committing to citywide development deals. With the undergirding of a housing element, councilmembers can credibly commit to community benefit packages that cannot be later undermined by amendments and backroom deals. Because housing elements are prescriptive with respect to specific land use changes, city councils can find some flexibility in a “zoning budget,” or a baseline of zoned capacity that balances downzonings with upzonings.

The paradigm shift in housing element law, enforcing a pro-housing default through the certification process and No Net Loss provisions, could bring about a sea change in how cities meet their mandates for adequate shelter of their constituents.