The regional housing allocation process should be suspended until it can be reformed, the Legislative Analysts' Office (LAO) has recommended. "The regional housing planning process is not very effective at ensuring the construction of affordable housing or obtaining compliance with state law," the LAO reported. "Almost half of communities are not in compliance with state law, and some communities do not make an effort to obtain compliance. There are few incentives or sanctions to encourage local government compliance and accountability. Moreover, in its current form, the process is only a planning exercise. Little follow-up effort is made to ensure that the plans are followed and affordable housing is actually built." The recommendation came in the LAO's late-February analysis of the proposed 2003-04 budget. Cities, counties and councils of government are eligible for state reimbursement of some costs related to the fair-share housing allocation process and local housing element updates. However, state reimbursements have not kept pace with local claims. The current year's budget and the proposed 2003-04 budget both defer payment of the mandated costs, which could amount to more than $5 million, the LAO reported. The LAO found that there was wild variation in the amounts claimed by local governments, and that there was no correlation between the amount of time and money a local government spent and its compliance with the state housing element law. State law requires cities and counties to update their housing elements every five years based on their fair-share allocation of regional housing needs, which is decided by the state and councils of government. The state suspended one round of housing element updates because of the budget crunch of the early 1990s. The current round of updates is scheduled to be completed by December 31. The LAO recommended not beginning the next round "pending the enactment of reforms to the process." THE HOUSING ELEMENT PROCESS also was questioned in a new study by the Public Policy Institute of California (PPIC). In "California's Housing Element Law: The Issue of Local Noncompliance," PPIC Research Fellow Paul Lewis detected no relationship between housing element compliance and housing production. Even out-of-compliance cities approved multi-family housing projects. After living with the housing element statute since 1969, the state needs a new approach, Lewis urged. "It may be a ripe occasion for policymakers and affected interests to seek an approach to housing policy that is more workable, transparent and straightforward," Lewis wrote. "In so doing, policymakers will need to resolve whether the major goal of such a law is a sheer increase in residential construction or an equitable distribution of affordable housing. Using a fair-share planning approach as a tool to encourage overall housing production may place an unrealistic burden on a relatively fragile policy." Lewis found that as of September 25, 2002, 33% cities and 22% of counties had housing elements that the state Department of Housing and Community Development judged as out of compliance with the state law. Lewis found that the cities most likely to be out of compliance were smaller, wealthier and had older housing stock than other cities. He also found that cities with long development review processes or overt limitations on residential growth were also more likely to be out of compliance. Compliance rates were lowest in the Bay Area, Central Valley and Inland Empire. The report is available on the PPIC website, http://www.ppic.org GOV. DAVIS HAS SIGNED a bill that sets fixed, four-year terms for members of the Coastal Commission who are appointed by the Legislature. Assembly Bill X2 1 (Jackson) passed the two houses of the Legislature in February largely along party lines. The bill responds to an appellate court ruling that found the appointments unconstitutional (see CP&DR In Brief and Legal Digest, February 2003). Bill supporters said eliminating the ability of the Assembly speaker and the Senate Rules Committee to remove Coastal Commission appointees at will should solve the constitutional deficiency. Property rights advocates, however, said that allowing lawmakers to appoint eight of 12 commissioners still violates the separation of powers doctrine. THE MOUNTAIN YELLOW-LEGGED FROG deserves protection under the federal Endangered Species Act (ESA), the U.S. Fish and Wildlife Service (USFWS) has concluded. However, USFWS officials announced in February that a lack of money prevented the agency from listing the rare frog under the ESA. The agency said compliance with court orders and judicially approved settlements, and defending new lawsuits, is eating up almost its entire budget. Environmentalists contended the Bush administration had intentionally gutted the USFWS budget to prevent the agency from protecting more species. The USFWS also announced in February that it would not grant protection to the California spotted owl because the bird's habitat is not sufficiently threatened. The decision was highly anticipated because the agency's 1990 decision to list as endangered the northern spotted owl greatly reduced logging in Oregon and Washington. Timber companies applauded the decision on the California owl, but environmentalists vowed to file a lawsuit. KERN COUNTY SUPERVISORS have approved a 1,100-acre expansion of the Tejon Industrial Complex along Interstate 5. The Tejon Ranch Company has already developed 1.5 million square feet of warehouse and distribution space. The new project, combined with previous approvals, permits the company to build up to 20 million square feet of industrial space at the northern end of the Grapevine. Full development is expected to take seven to ten years. The complex could eventually employ 6,000 people. However, there are few homes within 20 miles of the site, a fact noted by project opponents, who complained commuting workers would worsen the region's already dirty air. In late February, four environmental groups filed a lawsuit over the project's environmental impact report. THE EIR FOR A 4,600-unit housing development in unincorporated Riverside County has been thrown out. Riverside County Superior Court Judge E. Michael Kaiser ruled that the EIR for the Domenigoni-Barton subdivision in French Valley did not adequately address the impact of traffic in the nearby city of Temecula, which filed the lawsuit. The CITY OF GLENDALE and the Santa Monica Mountains Conservancy have purchased the 240-acre site of a proposed housing subdivision. Gregg Development Inc. had been trying to develop the mountainous site for 10 years before the City Council rejected the 572-lot Oakmont View V project in early 2002 (see CP&DR In Brief, April 2002). There had been a great deal of public protest against the project, as Glendale has restricted hillside development for years. Gregg filed a takings lawsuit against the city as well as a suit over the cost of the EIR that the city had billed to the developer. The suits were settled when Gregg agreed to sell the property for $25 million — $13 million from the city and $12 million from the conservancy. ORANGE COUNTY Chief Executive Officer Michael Schumacher did not survive a Development Services Department fee crisis. County supervisors voted 3-1 to dismiss Schumacher in early February. The agency was running a deficit of about $500,000 a month in late 2002 when then-director Thomas Mathews proposed a 50% increase in fees. Supervisors rejected that idea, Mathews resigned in January, and the size of the department has decreased by about 20%. ABOUT 24,000 APARTMENT units have converted from rent-restricted status to market rate in recent years, and another 48,000 units are at risk of conversion by 2006, according to a report by the state Senate Office of Research. The paper offers a number of recommendations to make housing permanently affordable, including amending state law to require local governments to make some portion of new housing permanently affordable. The report is available at http://www.sen.ca.gov/sor/senate.htp