Missing the Forest for the Builder’s Remedy Tree
Written by: Derek Galey & Max Masuda-Farkas
Several judicial decisions and recent legislation have reignited interest in the Builder’s Remedy provision of the California Housing Accountability Act (“HAA”). Since the first intrepid developer attempted to use the Builder's Remedy in Santa Monica in late 2022, much has been written about the provision in the past-year-and-a-half. Rather than rehash this well-trod ground, we would suggest that the potential significance of the provision is lost when considered in isolation. The Builder's Remedy is not a panacea for obstructive NIMBYism, but it does offer an additional tool that the sophisticated land use practitioner may utilize to maximize leverage with local government and attain approval for housing projects. Indeed, the Builder's Remedy is just one small part of what some consider to be a new era of state control over land-use decision making in California. By understanding how these tools work in concert, savvy developers are taking advantage of favorable provisions of state law to bring to fruition projects once destined to die on the vine.
The HAA was adopted in 1982, preventing local governments from disapproving or reducing the density of housing projects (whether market-rate or affordable[1]) that comply with local land use rules, unless the project would result in significant health or safety impacts. A 1990 amendment to the HAA, Senate Bill (SB) 2011, provided additional protection to affordable housing projects, including the Builder's Remedy provision that allows developers to override the zoning code and general plan limitations of cities that are out of compliance with the Housing Element Law. To qualify, 20% of the units in the project must be affordable to lower-income households, or 100% affordable to moderate-income households. Local governments without compliant Housing Elements may not disapprove or unduly condition such projects even if they are inconsistent with the general plan and zoning ordinance.[2]
Under the Housing Element Law, local governments must adopt a plan, or Housing Element, to accommodate their share of regional housing need as determined by the California Department of Housing and Community Development (HCD).[3] Housing Elements must be updated every eight years and submitted to HCD for review and approval.
The Builder's Remedy provision has become more powerful in recent years in part due to statutory changes that have made the Housing Element Law more rigorous. Passed in 2017, Assembly Bill (AB) 1397 provided more stringent rules for including sites in the required inventory of land for residential development. In 2018, SB 828 and AB 1771 changed the methodology that HCD uses to calculate regional housing need, dramatically increasing the amount of housing that must be accommodated in local governments' Housing Elements. Also in 2018, AB 686 expanded the duty of all California’s public agencies to affirmatively further fair housing (AFFH) and created new Housing Element requirements, including an assessment of fair housing practices, an analysis of the relationship between available sites and areas of high or low resources, and programs to affirmatively further fair housing. As a result of these and other changes, most jurisdictions have so far failed to achieve HCD certification of their Housing Elements by their respective statutory deadlines[4], unlocking the potential for developers to submit Builder's Remedy affordable housing project applications that flout local planning and zoning rules.
Notably, local governments that miss Housing Element compliance deadlines face recently-enacted penalties aside from exposure to Builder's Remedy project applications. These penalties accelerated timeframes for completing rezoning required for Housing Element implementation[5], potential enforcement actions from the HCD or from the California Attorney General's office[6], and ineligibility for community development block grant funds, which can have a meaningful impact on jurisdictions' budgets.
HCD has also opined that a preliminary application under the HAA (as amended in 2019 by SB 330) vests "any potential benefits afforded to the applicant as a result of the jurisdiction’s noncompliant status."[7] This determination seemingly clears the way for developers to submit many such preliminary applications during any period of non-compliance, affording themselves 180 days to follow up with complete project applications. Such projects would be entirely immune from local planning and zoning rules, even if the jurisdiction were to receive a determination of Housing Element compliance from HCD before the complete application for the project was submitted.
And developers have taken note, filing applications for projects including thousands of housing units in affluent Southern California cities such as Santa Monica and Redondo Beach.[8] Cities, in turn, have been scrambling to respond and to head off Builder's Remedy projects before they are filed.[9]
However, despite being in place for over two decades, as well as the recent favorable tailwinds, the Builder's Remedy has not yet to our knowledge been successfully used to force a municipality to approve a project exactly as submitted. Part of the reason for this lies in a combination of scant case law and statutory ambiguity.
Until recently, there was legal uncertainty due to a lack of precedent for the Builder's Remedy. Since the start of 2024, however, three major judicial decisions have begun to form the foundation of an emerging Builder’s Remedy jurisprudence. In two of the three cases, housing developers prevailed against two cities, La Cañada Flintridge and Los Angeles, in seeking a finding that their development applications did qualify for the Builder’s Remedy.[10] And in the third case, although the court held that the project at issue needed to comply with the California Coastal Act to qualify for the Builder’s Remedy, the court also rejected the city’s assertion that its housing plan was in substantial compliance with state law at the time the application was submitted, as such compliance is determined by official certification by the California Department of Housing and Community Development, not the city itself.[11]
Similarly, before, the Builder’s Remedy provision was ambiguously drafted, leaving open the possibility that projects that would otherwise seem to qualify for the Builder’s Remedy may be denied. For example, one provision of the HAA allows local governments to impose objective development standards, potentially overriding the Builder's Remedy.[12] Yet, recent efforts in the California Legislature have sought to patch up these holes in the statute. On the issue of objective standards, AB 1893 would stipulate the precise standards to which a project must adhere or else be denied qualification for the Builder’s Remedy.[13] In response to recent litigation, AB 1886 would clarify that a housing element is only in substantial compliance with state law not only when local officials have passed the element, but also when the California Department of Housing and Community Development has made an official determination of substantial compliance.[14]
Notwithstanding this significant progress toward making the Builder’s Remedy a viable entitlement mechanism, projects that require discretionary approvals are still subject to the California Environmental Quality Act (CEQA). The CEQA compliance requirement is the subject of a Superior Court Ruling regarding the 469 Stevenson Street project in San Francisco, which confirmed that the HAA does not compel project approvals "where environmental review has not been completed or where an agency has found the EIR to be deficient."[15] Lead agencies under CEQA have leeway to determine the nature and pace of the environmental review process. A recalcitrant local government could use this latitude to delay or even potentially to deny Builder's Remedy projects if significant, unavoidable impacts are identified and the local government is unwilling to make the requisite findings for a statement of overriding considerations. Of course, outside parties may also pursue CEQA challenges in opposition to Builder's Remedy projects. However, some Builder's Remedy projects may qualify for statutory or categorical exemptions or streamlining under SB 375.
For these and other reasons, the Builder's Remedy is only one approach among many that should be evaluated when considering how to entitle housing projects, even in jurisdictions without HCD-certified Housing Elements. Increasingly, however, the most prudent entitlement pathway does make use of laws adopted by a state legislature that has increasingly asserted control over land-use decision-making. Such laws include SB 35, enacted in 2017 and strengthened by AB 1174 in 2021, which provides an expedited, ministerial approval process for certain affordable housing projects; Density Bonus Law, which offers a number of incentives and protections for projects that include affordable housing; AB 2097, which eliminates parking requirements for certain projects located near transit; SB 9, which facilitates up to four housing units in a lot zoned for one single-family home; SB 6 and AB 2011, which allow and expedite housing development in commercial zones; AB 2234, which expedites post-entitlement housing project permits such as building permits, and many others.
Nevertheless, local governments will continue to retain significant control over planning, zoning, and project permitting decisions[16], and developers are well-advised to cooperate with local agencies while harnessing the ever more powerful arsenal of state-provided entitlement tools.
Sources:
[1] Honchariw v. County of Stanislaus, 200 Cal.App.4th 1066 (2011).
[2] Cal. Gov’t Code § 65589.5(d)(5).
[3] Cal. Gov’t Code § 65580 et seq.
[4] For example, local governments in the San Diego Association of Governments jurisdiction had a compliance deadline of April 15, 2021, and those within the Southern California Association of Governments jursidiction of October 15, 2021. Local governments in the Association of Bay Area Governments face a deadline of January 31, 2022.
[5] SB 197 (2022) afforded local governments with statutory housing element deadlines in 2021 an additional year to attain Housing Element compliance while maintaining the approximately three-year timeframe to complete required rezoning despite the shortened one-year timeframe that would otherwise be imposed by AB 1398 (2021). However, local governments that failed to achieve compliance within this window cannot be found in compliance with Housing Element Law until all necessary rezones are complete.
[6] The state was given new enforcement powers through AB 72, enacted in 2017, which authorizes HCD to refer violations of Housing Element Law to the state Attorney General. Passed in 2019, AB 101 builds on AB 72, providing remedies that the Attorney General may seek if a court finds that a local government is not substantially compliant with Housing Element Law.
[7] HCD, "3030 Nebraska Avenue, Santa Monica – Letter of Technical Assistance," Oct. 5, 2022
[8] Sarah Hofmann, "Redondo Beach Braces for Massive 'Builder's Remedy' Project," California Planning and Development Report. November 7, 2022.
[9] The City Council of Huntington Beach voted to "ban" Builder's Remedy developments on December 20, 2022.
[10] Jeff Collins, “Housing developers win first ‘builders remedy’ battles in fight to bypass local zoning,” Los Angeles Daily News. April 22, 2024.
[11] Ibid.
[12] Cal. Gov't Code § 65589.5(f)(1).
[13] AB-1893 Housing Accountability Act: housing disapprovals: required local findings.
[14] AB 1886: Housing Element Law: substantial compliance: Housing Accountability Act.
[15] Yes In My Back Yard v. City and County of San Francisco, San Francisco Superior Court No. CPF22517661.
[16] See California Constitution, Article XI, section 5(a), also known as the Home Rule provision, granting charter cities plenary authority over municipal affairs.