The first update of housing elements in a decade has resulted in something of a standoff between the Southern California Association of Governments and the state Department of Housing and Community Development. Stuck in the middle are Riverside and San Bernardino counties and several inland cities that do not know how many housing units to plan for. After negotiations with SCAG representatives throughout 1999, state officials ordered the regional agency to plan for 504,000 housing units during the 1998-2005 planning cycle. However, last November, SCAG submitted a final Regional Housing Needs Assessment (RHNA) allocating 438,000 housing units to the region's six counties and 184 cities. In December, HCD rejected SCAG's report, saying no justification existed for the reduction. The state adjusted SCAG's RHNA to 503,000 units. State law required SCAG jurisdictions to submit housing elements to HCD by December 31. Nearly a month after the deadline, only about 30 of 190 local governments had completed housing plans. The SCAG-HCD stalemate appears to force 11 local governments, mostly in the Inland Empire, to negotiate directly with the state, as HCD officials say they will reject housing elements that use disapproved SCAG housing targets. The various parties continue to talk, but HCD says its December response was final. Several state lawmakers have met with key players, but the legislators appear unlikely to intercede, at least for now, according to sources at the Capitol. "It's at the stage where it is all quite dicey," said Ty Schuiling, director of planning and programming for the San Bernardino Association of Governments. It will be difficult for HCD to back down. If the state allows SCAG to unilaterally decrease its housing allocation, the Association of Bay Area Governments and other regional planning organizations could see an invitation to develop their own housing targets despite the state's allocation formula. "We have fulfilled our statutory requirement to work with SCAG on coming up with the numbers," said Cathy Creswell, acting deputy director of HCD, who said HCD has authority to override SCAG's numbers. "We are required to make sure a region provides its fair share of the state's housing needs." Marc Brown, co-chairman of the California Housing Law Project said, "I think it's unfortunate in this case that SCAG felt like it has to challenge the entire process." Determining the need The housing allocation effort is a state-mandated process designed to give each city and county in the state a target number housing units at a variety of income levels. Local jurisdictions use the target numbers as a basis for their general plan housing elements, which must spell out how and where the city or county will accommodate the units. The state provides an allotment of housing units to every region, and the regional planning agency divvies them up among its cities and counties. The state originally gave the SCAG region a target of about 675,000 units, a number that SCAG eventually negotiated down to 504,000. But dozens of local jurisdiction were dissatisfied with how SCAG allotted those units across the southland. So SCAG conducted two rounds of appeals for its members — about a quarter of which sought to reduce their targets (see CP&DR, June 2000). During the second round, SCAG accepted all or part of appeals from 11 cities and counties for a total of 67,000 units. But SCAG never added those 67,000 units to other jurisdictions, instead cutting its RHNA by the same amount. Leaders of SCAG contend that state officials relied on outdated information and assumptions when they set the region's housing target. In a November letter to Housing and Community Development Director Julie Bornstein, SCAG President Ronald Bates wrote, "SCAG has reduced the regional housing need from the Draft RHNA because parts of the region have experienced long-term and profound distress in the housing market, influenced by base closures, high vacancy, foreclosure, and the lingering effects of the last recession." Plus, said SCAG Principle Planner Joe Carreras, the census counted more Californians than the state Department of Finance had estimated, meaning that more large families are living in the same home, a trend not reflected by HCD's housing allocation. "Clearly there is a really huge affordable housing crunch statewide, and we're a part of that," Carreras said. But focussing on the RHNA number instead of on how to solve the problem does little good, he said. The association worked on establishing good, defendable housing goals and did not worry so much about the final number, he said. Also, SCAG is following through on an action plan that resulted from a "housing summit" last fall, and is preparing a 10-year review of the region's housing and economic trends, he said. Officials in Sacramento are unconvinced. In an attachment to HCD's December response to SCAG, the state defended its use of Department of Finance data: "What is reflected in more recent DOF housing and household estimates is low housing production, or lower household formation; a problem that needs to be addressed by measures to increase housing construction, not reinforced by constraining the projected need, or the capacity to accommodate it. The incidence of families doubling up in single housing units, for example, does not justify defacto incorporation of it as a planning parameter." Creswell said state officials began working with SCAG on regional housing targets in 1997. She said SCAG had a good process until late last year, when it deviated from the process by reducing some jurisdictions' targets without redistributing those units elsewhere. The Inland Inquiry Lying at the center of the dispute are western Riverside and San Bernardino counties. San Bernardino County and its cities of Chino Hills, Victorville and San Bernardino all had their housing targets lowered on appeal by SCAG. Riverside County and its cities of Moreno Valley and Riverside also had their targets lowered by SCAG. Those seven jurisdictions account for 50,000 of the disputed units, as HCD insists that they keep their original allotment from SCAG. In the case of unincorporated San Bernardino County, HCD insists on a target of 43,668 units, while SCAG approved a target of 16,211. Neither number reflects market trends, as the generally pro-growth county has issued about a 1,000 housing permits a year recently. "The rate at which the Inland Empire would have to grow to meet the [original] SCAG targets would be equal to the highest growth rate ever in the area, year after year after year," said SANBAG's Schuiling. "We don't claim to know what the right regional total is. But I do know that it is unreasonable to expect any part of the region to have record-setting growth year after year to meet a target handed to it by another agency." Arguing that it has not recovered from the recession and military base closures of the early 1990s, the City of San Bernardino successfully lobbied SCAG to reduce its housing target from nearly 3,800 units to zero. Both SCAG and HCD relied on old census data that did not reflect the closure of Norton Air Force Base and the Santa Fe rail yard, which eliminated thousands of jobs, said Valerie Ross, senior planner for the city. "We had the highest HUD foreclosure rate in the nation," she said. "We have vacant units throughout the city, both single- and multi-family." Ross also contended it is unfair for HCD to certify housing elements from other jurisdictions in the SCAG region while it rejects others that rely on SCAG-approved targets. The state's approvals eliminate the possibility of units getting redistributed to other jurisdictions. San Bernardino has not yet submitted a housing element to the state. The City of Moreno Valley has submitted a housing element, but it was based on a target of 3,500 units that SCAG approved on appeal — down from an earlier allotment of 10,000. The city has not heard back from the state, said Linda Guillis, the city's community and economic development director. Moreno Valley, just southeast of Riverside, was stung when March Air Force Base shuttered, eliminating 10,000 jobs. During the recession, Moreno Valley accounted for 62% of Riverside County's foreclosures, Guillis said. Even now, the city issues permits for only about 300 new homes a year, despite the existence in specific plans approvals for 19,000 units, she said. "We do have land available. We have an extremely business-friendly process and political environment. Frankly, we're ready to see the housing end of the market catch up," she said. Like other people, Guillis complained that SCAG appeared to view the Inland Empire as a convenient place to dump affordable housing. While Riverside and San Bernardino counties account for 19% of the current population, the original RHNA placed 46% of growth in the area. "We'd like to see some logical relationship between the jobs and the housing for people who work in those jobs. We're already in a housing-rich area," Guillis said. "When you create housing units in Moreno Valley, people are on the 91 freeway commuting to jobs in Orange County, and on the 10 and 60 freeways to get to jobs in Los Angeles County. What you have is a significant impact on the transportation corridors and on the air quality." Guillis also noted that the RHNA process is intended to prevent undue concentrations of low- and moderate-income housing. Yet at its current growth rate, Moreno Valley could not provide the targeted number of 2,900 very low- and low-income units sought by HCD — even if every new unit approved during the planning cycle were in the very low- and low-income bracket, she said. Creswell, of HCD, said she is sympathetic to many of these arguments. But, she said, SCAG should have dealt with them and not deferred the controversy to HCD at the end of the planning process. The department will certify housing elements from other jurisdictions because it cannot hold them hostage while a small group disputes its housing targets, she added. In the December response letter, state officials reject pleas from the Inland Empire and SCAG regarding a flat economy. The state employment growth has been double the national rate, which itself set records, and the Riverside-San Bernardino area had a higher rate of employment growth than any of the state's other major metro areas in 1999 and 2000, according to HCD. Still Creswell said state officials are willing to provide resources to aid economic development in Riverside and San Bernardino counties. The housing allocation process offered the opportunity for regional planners to determine a better distribution of jobs and housing; instead, they reaffirmed the traditional pattern of jobs near the coast and housing inland, she said. "We absolutely appreciate their (Inland Empire leaders) concern about needing a stronger job base in relationship to their housing," Creswell said. But she added, "This is fundamentally a problem that the region needs to deal with. … From our perspective, the region has gone without planning for housing for most of the last decade." Carreras, principle planner at SCAG, defended the association's decisions based on a weak Inland Empire job market, high vacancy rates, and lingering effects of the military's pullout. He said the association will promote dialogue between its members and the state. Carreras also said he recognizes the need for infill development of affordable and high-end housing in mature areas, especially three zones that are targets for venture capital, namely Eastern Ventura County, Santa Monica and Irvine. However, developers see infill projects as risky, and cities are often reluctant to approve housing development when there is limited vacant land available, he said. "We have to address fiscalization of land use if we're going to see any changes in development patterns of any scale in California," Carreras said. Whether the Legislature addresses that concern in a meaningful fashion this year is unknown. There is talk in the Capitol this year of housing element reform, including putting teeth in the existing housing element law by establishing serious penalties for noncompliant jurisdictions. No matter what the Legislature does, housing advocate Brown said, SCAG needs to ensure low-income housing units are fairly distributed. And cities in the Inland Empire and elsewhere need to decide how they are going to meet an unquestionable housing demand, he said. Contacts: Cathy Creswell, Department of Housing and Community Development, (916) 323-3183. Joe Carreras, Southern California Association of Governments, (213) 236-1856. Ty Schuiling, San Bernardino Association of Governments, (909) 884-8276. Linda Guillis, City of Moreno Valley, (909) 413-3210. Valerie Ross, City of San Bernardino, (909) 384-5057. Marc Brown, California Housing Law Project, (916) 446-9241. SCAG RHNA website: http://api.ucla.edu/rhna/index.cfm