Only 3% of California’s cities and counties are fully on track to meet state goals to build sufficient housing — and 30% are failing to issue any permits at all for affordable housing, an analysis of state data shows.

The Southern California News Group used that data to create its second annual housing permit report card for all 539 cities and counties in the state. Only 33 were doing well enough to earn an A, while 96 got an F. The average grade was a C-minus.

There was some improvement from the year before: more B’s, fewer F’s. However, the gulf continues to widen between how many homes are being built for lower- and higher-income buyers.

Of the more than 116,000 permits that jurisdictions reported issuing in 2019, the year covered by the most recent state data, 78% were for above-moderate-income housing. A mere 13% were for moderate-income housing and 9% for low- and very-low-income housing.

Scott Wiener, who heads the state Senate Housing Committee, said the report card highlights how big a hole California has dug when it comes to building adequate housing.

“We still have a culture in California,” said Wiener, D-San Francisco, “of always questioning new housing, of having a laundry list of objections to any kind of housing — it’s the wrong location, it’s going to affect parking, it’s going to affect traffic, it’s going to do all these terrible things — and losing sight of the fact that housing is one of the fundamental human needs.”

Although homebuilding has risen steadily since the end of the Great Recession, it is still nowhere near the levels that state leaders say are needed to fix California’s housing crisis.

To that end, municipalities are about to see their housing goals go up — way up. Southern California is being asked to add more than 1.3 million homes between 2021 and 2029, an expectation that many local leaders are protesting as unrealistic. The state isn’t backing down.

With so many locations failing to meet their current goals, how will they meet even higher ones?

In early January, Gov. Gavin Newsom proposed creating a new Housing Accountability Unit to provide technical assistance to local governments — and enforcement action against those that refuse to comply with state laws.

Wiener, who called the governor’s proposal “a HUGE step” on Twitter, said in an interview: “It will create a focal point in state government to really send a message that when we pass a state housing law, we mean it.”

RHNA cycles

California uses a process called the Regional Housing Needs Assessment, or RHNA (pronounced “reena”), to determine how many housing units are needed in various regions. Local governments within each region then divvy up the total number between all of the cities and unincorporated county areas. The process happens every five to eight years, with the starting year staggered between different regions.

Each jurisdiction’s total number is divided into four categories:

  • Very-low-income housing that would be affordable for people making less than half of the area’s median income
  • Low-income housing for people making 51-80% of median income
  • Moderate-income housing for people making 81-120% of median income
  • Above-moderate-income housing for people making more than 120% of median income

The low and very low categories are what the state considers “affordable housing.”

Cities and counties are required by law to adopt land-use plans and zone enough land to accommodate their RHNA goals, but not to actually ensure homes are built — that’s up to developers.

There are few real consequences for not meeting RHNA goals. In places that have fallen far enough behind, developers can seek a streamlined approval process for projects that include a certain amount of affordable units, but few developers are using it.

Every April, jurisdictions are supposed to send the state housing department a progress report (not all do) saying how many homes they permitted in each category the previous year. In 2020, the state gave jurisdictions a little extra time because of the pandemic, then initially released a report with errors in it, so accurate numbers from 2019 weren’t available until October 2020.

In the Southern California News Group’s report card, each jurisdiction is graded on how close it is to being on track to the goal in each of those four categories, based on how far the region is into its RHNA cycle.

For jurisdictions in Los Angeles, Orange, Riverside, San Bernardino, Ventura and Imperial counties — which make up the Southern California Association of Governments — 2019 was year six of an eight-year cycle. So if a city had a goal of 80 moderate-income homes, it would need to have permitted at least 60 to be on track and get an A grade. If it had permitted 30, it would get a C. Zero meant an F.

The overall grade factored in the four category grades as well as any extra credit a jurisdiction earned for doing well in the lower- and moderate-income categories, improving from 2018 and degree of difficulty.

More than 200 jurisdictions got better overall grades for 2019 than they did for 2018, while about 100 got worse grades.

But the report card shows wildly divergent success rates in the four income categories.

Only 48 jurisdictions earned an A for being fully on track with very-low-income housing, while 249 — almost half — got an F for having permitted zero homes in that category.

The numbers were almost exactly opposite for the above-moderate-income category: 256 earned A’s while 48 received F’s.

Statewide, jurisdictions are supposed to issue more than 460,000 permits for low- and very-low-income housing during their current RHNA cycles. They would collectively need more than 320,000 by 2019 to be on track but had permitted fewer than 63,000.

That’s not the case with above-moderate-income housing. Jurisdictions have already exceeded the final target of about 488,000 permits.

Only 18 jurisdictions were fully on track in all four categories, including Beverly Hills, La Habra, San Bernardino County, San Marino, Santa Ana, West Hollywood and Westminster in Southern California.

Most of those 18 locations had very low RHNA goals — on average, they were asked to permit only 100 homes in their current cycle. San Marino and Westminster were asked to permit only two homes; three in Beverly Hills; four in La Habra.

However, in general, jurisdictions with small RHNA goals weren’t doing much better than those with large RHNA goals. The average grade for cities and counties with a RHNA goal of fewer than 100 homes was a C-minus, while the average grade for places with RHNA goals of more than 1,500 homes was a D-plus.

Cities react to grades

Newport Beach is among the cities with the lowest RHNA goals in the current cycle: five new homes between 2013 and 2021. It has permitted more than 1,700 homes, but because none are in the moderate-income category, it’s receiving a B-plus on the latest SCNG report card. In 2019, it added 93 very-low-income homes, one low-income home and 394 above-moderate-income homes.

Getting affordable housing built is “definitely challenging,” Community Development Director Seimone Jurjis said, but “there are ways to make it work.” He noted that 78 more low-income homes are expected to be permitted soon in Newport Beach.

Establishing a dialogue with developers on the front end of projects is important, Jurjis said, as is giving them some latitude such as allowing denser housing. No matter how much you plan to sell each unit for, the costs of labor, land and materials are the same, but building more units on the same amount of land can help developers offset losses.

He and officials in other cities said financial incentives such as state tax credits are also key — and the competition for the limited pools of funding is intense.

By the end of 2019, San Gabriel was less than halfway toward its goal of adding 930 new homes and has permitted only one of the 236 very-low-income homes it’s supposed to. The city slipped from a C-plus to a C on the latest report card after permitting only 34 homes in a year.

San Gabriel’s biggest challenge is not having much vacant land to build on, said Arminé Chaparyan, the community development director and assistant city manager. At only about 40,000 residents and 4.1 square miles, the city is small in both population and area, and Chaparyan said it’s mostly built out.

San Gabriel’s City Council is supportive of affordable housing efforts, Chaparyan said: On Jan. 19, it hired a consultant to help with some key housing issues, and it’s working with a developer to build an affordable housing project on surplus land that had been used for construction staging. The city is also exploring the concept of an inclusionary housing policy, meaning any development would have to include a certain number of affordable units, such as nearby Pasadena did in 2019.

Pasadena passed an inclusionary housing ordinance in 2019 to encourage more affordable housing development.In this August 6, 2020 file photo, Juanita West Tillman walks through the completed Decker & Gill Court, a historic preservation and affordable housing development in Pasadena. (Photo by Sarah Reingewirtz, Los Angeles Daily News/SCNG) 

“I think realistically now in California, developers can expect to see some level of affordable housing being required of them,” she said. “More and more developers are starting to understand that’s just a reality.”

Corona had been asked to permit 770 new homes by October 2021, and had issued more than three times that many — but the vast majority have been for above-moderate-income housing, which is why it’s earning a B-minus on this year’s report card.

All 609 of the homes Corona permitted in 2019 were priced for above-moderate-income buyers, and Community Development Director Joanne Coletta said 2020 will be the same.

The city has land set aside for affordable housing — which Coletta noted puts Corona in compliance with housing laws — but no projects for that land have come to fruition.

“The city has laid the roadmap for the developers,” she said. “Now it’s up to them to come in and try to get permits pulled.”

‘Complicit in underproduction’

Several affordable housing developers pushed back against that way of thinking.

“Cities often like to remind us that local governments don’t actually build housing,” said Alan Greenlee, executive director of the Southern California Association of Nonprofit Housing. “While this is true, local jurisdictions control the planning of housing choices in their communities and therefore are entirely complicit in years of underproduction across the state.”

The developers agreed with city officials that high land and construction costs and scarcity of public funding are significant obstacles — and that California’s disbanding of redevelopment agencies in 2012 didn’t help — but said that’s only part of the story.

Many cities lack the political motivation to build affordable housing, and local residents like the way their hometowns already are, said Steve PonTell, president and CEO of National Community Renaissance, an affordable housing developer. They don’t want to see more housing — especially affordable housing “because they don’t want ‘those people,’” PonTell said.

The lack of requirements to ensure affordable housing is built makes it easy for city councils “to take the easy way out and deny developments that might cause community concerns,” said Laura Archuleta, president and CEO of affordable housing developer Jamboree Housing.

“Affordable housing, as part of a full spectrum of housing opportunities, helps support our local economies and workers — there’s no city that shouldn’t be concerned with nurturing their local economy, especially after COVID-19, and housing should be a part of that,” Archuleta said in an email.

Rehab construction continues at the Econolodge at 2691 W. La Palma Avenue in Anaheim on Wednesday, January 27, 2021. Construction of the new affordable housing developments is now underway in Southern California, though California cities and counties still lag in building enough homes to meet state goals established for each of the state’s 539 municipalities. (Photo by Mark Rightmire, Orange County Register/SCNG) 

Bigger goals, more accountability

Across Southern California, municipal officials are worrying about how they’re going to meet their RHNA goals for 2021-2029. The Southern California Association of Governments is in the final stages of divvying up the 1.34 million homes that the state says are needed between the 197 cities and counties in the region.

The majority of jurisdictions will see their allocations at least double. San Gabriel’s will more than triple. Corona’s will be almost eight times higher. Newport Beach’s will go from just five homes in the current cycle to more than 4,800 in the next one.

“That’s four decades of growth in one cycle,” Jurjis said.

Newport Beach and San Gabriel are among the 47 cities that appealed their allocations — both were denied, as was almost everyone else — and while Corona didn’t appeal, Coletta said the city’s allocation is completely unrealistic.

The Housing Accountability Unit that Newsom is proposing aims to help jurisdictions meet their goals.

The governor’s Jan. 8 budget proposal seeks to appropriate $4.3 million to set the unit up in the state Housing and Community Development Department. If passed by the Legislature, it would help cities with planning and zoning “before enforcement becomes necessary.”

Technical assistance would be the unit’s main purpose, state Housing Director Gustavo Velasquez said in an email.

“Helping local governments clear the regulatory path for responsible residential development is essential to yielding actual construction of new housing units,” Velasquez said.

Velasquez said creating the new unit is “timely and necessary” as local governments are being expected to greatly increase the number of new homes in their general plans for the next RHNA cycle.

“We know the numbers weren’t met in the (current) cycle,” he said, “but most importantly we look forward to the (next) cycle where the numbers are much greater — but the assistance that the state can render to local jurisdictions will also be much greater.”

Wiener said the housing department’s responsibilities have grown over the past five years as the state stepped up passage of new housing laws. The additional money will allow the department to staff up to handle its increased role.

California has a lot of small cities with very limited planning staff and too little expertise, he said. The new housing unit would provide technical support for smaller cities that may want to do the right thing but simply lack the staff to comply.

“It’s not just about enforcement,” Wiener said.

Some cities may be grateful for the assistance, but not everyone is welcoming the plan.

“The state is once again interfering in local government, rather than local government having the authority,” Coletta said.