Demystifying RHNA: A Guide for the Perplexed Californian – Pacific Research Institute

Demystifying RHNA: A Guide for the Perplexed Californian

The state of California is in the midst of a Regional Housing Needs Assessment (RHNA) cycle. It happens every eight years, and with the sixth cycle currently underway, you’ve no doubt seen headlines about it. For the uninitiated, it probably seems like an alphabet soup of bureaucracy. What exactly is RHNA? How are the numbers calculated? What does this mean for local planning? And if this process has been going on for decades, why is housing in California still so expensive? Let’s dig in.

Why does RHNA exist? Without some oversight, many local regulators in California would permit little to no new housing. Given how taxes work in our state, municipalities have an incentive to attract jobs and retail, while off-loading housing onto the town next door. As a result, California doesn’t build enough housing, resulting in an ever-higher cost of living. The purpose of RHNA is to ensure that every municipality is permitting its fair share of the housing development that our state needs.

How does RHNA work? There are three stages: First, the California Department of Housing and Community Development (HCD), in consultation with the various Councils of Government (COGs), determines how much housing each region must plan for to keep up with projected population growth over an eight-year period. The cycle currently underway runs from 2021 to 2029. These allocations vary: rural Mono County only needs to accommodate 240 new housing units by 2029; metropolitan Los Angeles must plan for 1,342,827 homes over the same period.

Second, each COG –an entity that organizes the state’s various metropolitan areas — must then divide this housing up among its constituent members. For example, the San Diego Association of Governments (SANDAG) recently allocated 171,685 units across the 19 local governments it coordinates. SANGAG’s allocation process prioritized planning for housing near jobs and transit; major cities like San Diego must plan for more housing, while beach towns like Del Mar must plan for less. Other COGs may center goals like avoiding fire zones or leveraging existing infrastructure.

Finally, each municipality must develop a plan that will facilitate their fair share of housing. This means revising the local Housing Element. This document — which HCD must certify as being compliant — identifies where the city will allow developers to build new housing, how local zoning rules will be liberalized to remove barriers to development, and what programs the municipality will run to encourage income-restricted housing. For example, in Culver City — where Housing Element revisions are currently underway — local officials are considering the removal of zoning regulations that block multifamily construction.

The RHNA process has existed in some form since 1969. And yet, housing in California is still among the most expensive in the country. What gives? First, until recently, it was easy for municipalities to produce bad faith plans that looked compliant, but in reality, facilitated little housing development. For example, in the previous RHNA cycle, La Cañada Flintridge was tasked with planning for 112 homes; in practice, their “plan” didn’t facilitate any new housing construction. Many municipalities play similar games, such that little housing gets built.

Second, municipalities can sue to get out of their fair share. Wealthier suburbs have often taken this route to drive down their allocations or avoid permitting any housing. As we speak, at least 27 of the wealthiest cities in the Bay Area — many of California’s “progressive” enclaves — are currently working to avoid having to plan for their fair share of housing. At best, these appeals drag out the process; at worst, they reduce the amount of housing that municipalities must plan for — plans that, as we saw above, may not even result in actual housing getting built.

Recent reforms have chipped away at these flaws. Various bills passed since 2017 have tightened the process, setting baseline rules for local planning efforts. SB 35 even allows developers to sue for permits in municipalities that aren’t on track to permit enough housing. And as a matter of policy, the Newsom administration has set ambitious goals — as yet unrealized — for housing construction in California, which could mean stricter HCD review of local Housing Elements. Will it be enough to finally give RHNA teeth and clear out some of the local regulations blocking new housing production in the Golden State? We’re about to find out.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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