California’s Regional Housing Needs Assessment process is decades old, but for all the conflict it generates, there is little evidence that it has balanced housing supply and demand or made housing affordable for the majority of Californians. The state should stop performing RHNAs and instead let market forces determine the housing supply.
The state government began asking and ultimately ordering local governments to prepare housing elements as part of their general plans in the late 1960s. By the 1980s, the California Department of Housing and Community Development was benchmarking these housing elements against centrally determined housing needs.
During this period, Southern California experienced rapid population growth. Across the six counties overseen by the Southern California Association of Governments, decennial population growth consistently topped 12% and was as high as 26% in the 1980s. (Those counties are Los Angeles, Orange, Riverside, San Bernardino, Ventura and Imperial.) So, there was at least a plausible argument for government action to ensure sufficient housing production.
But the state’s approach was both ineffective and unpopular. California home prices continued to skyrocket, becoming detached from prices across most of the country. In a 1993 state senate committee hearing, legislative staff reported that only 33% of local governments were submitting compliant housing elements to the HCD.
Long Beach’s then-Director of Planning and Building Robert Paternoster told the committee that “the housing element is the most despised General Plan element by local officials.” He continued by asserting that the local government’s main goal in drafting housing elements was to produce a document that was defensible in court and concluded that “housing element law is designed to produce plans, not shelter.”
Thirty-one years later, local officials remain frustrated with the RHNA process and the housing elements they must produce to satisfy its requirements. But what has changed since 1993 is Southern California population growth, which has flatlined, obviating the need for the whole process.
Today, SCAG’s 197 local governments are working under HCD’s mandate to produce 1,341,827 housing units by October 2029. But when the housing allocations were developed in 2019, HCD expected the population across the six SCAG counties to grow from 19.2 million to 20.5 million at the planning horizon. But instead, SCAG population dropped sharply during the pandemic and is now expected to reach only 18.7 million, according to Department of Finance demographers. They expect SCAG population to peak at 19 million in 2045 before falling back to 18 million in 2070.
SCAG’s RHNA housing quota is not only based on stale and overstated population estimates but makes other aggressive assumptions. According to an appeal from SCAG itself, HCD used inflated vacancy, overcrowding and home demolition rates in determining the area’s sixth RHNA cycle, which was more than triple the requirement calculated in the previous cycle.
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The result is that the state is punishing cities, including Huntington Beach and Norwalk, for not meeting unjustified housing production quotas. For example, a recent press release from Governor Gavin Newsom’s office asserts that Norwalk “has only issued permits for 175 units during this housing element cycle, a mere 3.5% of its 5,034 assigned Regional Housing Needs Allocation.” But Norwalk’s population has fallen significantly from its 2015 peak, leading one to wonder whether the city needs to produce any new housing at all.
Not everything about state intervention in land use is bad. Undoubtedly, some communities make it too difficult for developers to create new housing, and in these instances, state overrides of local decisions may make sense. But California’s existing state-led housing needs process is too heavy-handed, arbitrary and ineffective. It is time to abolish it.
Marc Joffe is a federalism and state policy analyst at the Cato Institute.
