The Builder’s Remedy: What Every Developer Should Know
The Builder’s Remedy: What Every Developer Should Know
In recent months, a lesser known provision of California's housing laws has been making headlines throughout the state as a potential seismic shock, potentially removing many obstacles to housing development in California.
Under the "Builder's Remedy," California cities and counties out of compliance with Housing Element law have forfeited their authority to deny affordable housing projects on the grounds the project is inconsistent with zoning and/or General Plan standards.1 This may provide key opportunities for developers to entitle housing projects throughout California, including in jurisdictions that have typically placed strict limits on the size, density, or location of housing projects.
Developers should be keenly aware of the Builders Remedy, and how it can be used to their advantage throughout the 252 jurisdictions in California that the California Department of Housing and Community Development ("HCD") lists as currently out of compliance with State Housing Element law.
Below, we've outlined answers to some common developer questions regarding use of the Builder's Remedy.
What is the Builder’s Remedy?
Government Code section 65589.5(d)(5), known as the "Builder's Remedy," is a provision of California's Housing Accountability Act that prevents jurisdictions without a substantially compliant housing element from denying certain housing projects, even if such projects do not comply with the jurisdiction's zoning ordinance or general plan.
Pursuant to Government Code section 65589.5(d), cities and other local entities may not disapprove certain housing projects or condition their approval in a manner that renders the projects infeasible unless certain specific conditions are met. One of these conditions states that a local jurisdiction may not use inconsistency with a zoning ordinance or general plan to deny a project or condition a project in way that makes it infeasible unless that local jurisdiction has adopted a housing element that is in substantial compliance with State Housing Element law.
Consequently, if a city or county is out of compliance with State Housing Element Law, developers may propose certain housing projects that are inconsistent with the jurisdiction's zoning ordinance or general plan, and the jurisdiction may not use that inconsistency as a basis to deny the Project.
Why is the Builder's Remedy coming up now?
Under State law, every local jurisdiction must adopt an updated version of the housing element of its General Plan every five or eight years.2 Before adopting an updated housing element, a local jurisdiction must submit a draft housing element to HCD for review. HCD then either certifies that the draft housing element complies with State law, or provides the local jurisdiction with comments to revise and resubmit the draft housing element.3 In the past three years, most jurisdictions have faced a deadline to adopt an updated housing element – including all cities and counties in the Southern California Association of Governments (including, but not limited to, cities within Los Angeles, Orange, and Riverside Counties), which had to adopt compliant housing elements by October 15, 2021, and all cities and counties in the Association of Bay Area Governments (including, but not limited to, cities within Alameda, Contra Costa, San Mateo, Santa Clara, and Marin Counties), which had to adopt compliant housing elements by January 31, 2023.4 Any city or county that missed its respective deadline to adopt a substantially compliant housing element was immediately out of compliance with State Housing Element Law, and HCD has suggested that any city or county that currently lacks an HCD-approved housing element after its relevant deadline is currently subject to the Builder's Remedy.5 By HCD's latest count, 252 jurisdictions are currently out of compliance and potentially subject to the Builder's Remedy.
How do I know if my project is eligible for the Builder's Remedy?
The project must be a "Housing Development Project" under the Housing Accountability Act.
The Builders Remedy is only available for residential projects that meet the Housing Accountability Act's definition of a "Housing Development Project," which is limited to developments consisting of one of the following:
- Residential units only.
- Mixed-use developments consisting of residential and nonresidential uses with at least two-thirds of the square footage designated for residential use.
- Transitional housing or supportive housing.6
The Builder's Remedy is not available for entirely commercial or non-residential projects.
The project must meet affordability requirements.
The Builder’s Remedy is further limited to projects that meet specific affordability thresholds. In order to qualify, a project must include:
- Twenty percent of the total units sold or rented to lower-income households;7
- One-hundred percent of the units sold or rented to moderate-income households;8 or
- The project must be an emergency shelter.9
The project must be located in a city or county that is not currently in substantial compliance with state housing element law.
As discussed above, the project must be located in city or county that is currently out of compliance with State Housing Element law. HCD maintains a Housing Element Compliance Report which lists all jurisdictions out of compliance with State Housing Element law at: https://www.hcd.ca.gov/planning-and-community-development/housing-open-data-tools/housing-element-review-and-compliance-report.
Currently, HCD lists 103 of the 109 cities and counties in the Association of Bay Area Governments as out of compliance with State Housing Element law, and 106 of the 197 cities and counties in the Southern California Association of Governments as out of compliance with State Housing Element law.
However, there are different degrees of non-compliance, and not all cities and counties are similarly situated. Some cities and counties listed as "non-compliant" have submitted first or second draft housing elements to HCD that are currently under review, and are prepared to adopt a revised housing element, therefore escaping the Builder's Remedy, as soon as HCD certifies that the submitted housing element complies with State Law. Other cities and counties have not even taken the first step of drafting a revised housing element, and can be expected to remain subject to the Builder's Remedy for a lengthy period of time.
Landowners and developers interested in an assessment of a particular jurisdiction's susceptibility to Builder's Remedy provisions may contact Hanson Bridgett's Land Use Group.
I think I have an eligible Builders Remedy project, what should I do next?
Since cities and counties are no longer subject to the Builder's Remedy after adopting a compliant housing element, it is important for developers to take the first steps in submitting a potential project while a jurisdiction remains out of compliance.
HCD has recently clarified that a developer that submits a preliminary application subject to Government Code section 65941.1, commonly referred to as Senate Bill 330 ("SB 330"), while a city or county is subject to the Builder's Remedy will maintain a vested right to develop that project subject to the Builder's Remedy even if the city or county eventually adopts a compliant housing element before the project is approved.10
Therefore, in order to ensure that the benefit of the Builder's Remedy applies to a project throughout the entirety of the entitlement process, a developer should submit a SB 330 preliminary application for the project, and as soon as possiblewhile the jurisdiction remains out of compliance. This is especially important given the varying stages that jurisdictions may be in with respect to adopting a compliant housing element.
Are there any other grounds under which a local jurisdiction can deny a project that qualifies for the Builder's Remedy?
Under Government Code section 65589.5(d), a project that qualifies for the Builder's Remedy can still be denied or conditioned in a way that renders it infeasible in certain very narrow circumstances where the reviewing jurisdiction is able make one of the following written findings, supported by substantial evidence:
- The project would have a specific, adverse impact upon the public health or safety, and there is no feasible method to satisfactorily mitigate or avoid the specific adverse impact without rendering the development unaffordable to low-income households;
- Denial of the project or imposition of conditions is required in order to comply with specific state or federal law, and there is no feasible method to comply without rendering the development unaffordable to low-income households; or
- The project is proposed on land zoned for agriculture or resource preservation that is surrounded on at least two sides by land being used for agricultural or resource preservation purposes, or which does not have adequate water or wastewater facilities to serve the project.
What future legal developments might be relevant to Builder's Remedy projects?
While the Builder's Remedy was enacted over thirty years ago, it has not been used frequently in the past. However, HCD's recent guidance and the many cities and counties in noncompliance bring unique opportunities for developers, as evidenced by recent high profile Builder's Remedy project submittals in Santa Monica and Los Angeles.
Nevertheless, given the relatively untested nature of the Builder's Remedy, there are uncertainties for developers, which may be addressed by HCD, the legislature, or courts as more jurisdictions are forced to reckon with Builder's Remedy project applications. Such uncertainties include:
- While some jurisdictions, such as Mountain View, have begun processing applications, other jurisdictions, such as Los Altos Hills, have refused to process applications, arguing that they have already submitted a draft housing element to HCD which the City believes is compliant (and which the City has officially adopted) and are merely waiting for HCD to officially deem the housing elements compliant. Jurisdictions in the latter camp will argue that any eventual finding of compliance should be backdated to the date that the city adopted the draft housing element. No California court has examined this issue, though it should be noted that HCD currently lists all cities and counties that have adopted housing element drafts not yet approved by HCD as "out of compliance," and recent comments from HCD suggest that the agency believes that jurisdictions are subject to the Builder's Remedy until HCD officially certifies their housing element as compliant.
- Government Code section 65589.5, subdivision (f)(1) states that cities or counties may, however, require that a housing development project comply with objective, written development standards, conditions, and policies appropriate to, and consistent with, meeting the Regional Housing Needs Allocation ("RHNA") needs, and further clarifies that any such development standards, conditions, and policies shall be applied to “facilitate and accommodate development” at the density permitted on the site and proposed by the development. It remains to be seen how this provision is meant to interact with the Builder's Remedy and which, if any, development standards or policies can be deemed "consistent with" meeting RHNA needs.
- Builder's Remedy projects are still subject to the California Environmental Quality Act ("CEQA"), and to the extent that Builder’s Remedy projects require discretionary approvals, they must nevertheless undergo environmental review.11 However, given the narrow bases for project denial under Government Code section 65589.5(d), it is unclear to what extent a jurisdiction can deny a Builder's Remedy project based on the information reported in a CEQA environmental review document. Currently, there is very limited precedent regarding the interaction between the protection afforded to housing projects under the Housing Accountability Act and the environmental review mandates of CEQA.
Despite these uncertainties, the Builder's Remedy seems poised to afford developers throughout the state a golden opportunity to get traction on projects which may have been non-starters with local jurisdictions even a year ago.
Landowners and developers interested in submitting a project under the Builder's Remedy may contact Hanson Bridgett's Land Use Group.
1 Government Code, § 65589.5, subd. (d)(5).
2 Government Code, § 65588.
3 Government Code, § 65585.
4 A list of all housing element due dates for jurisdictions in California can be found here [PDF]
5 Some cities have taken the position that adopting a Housing Element that a city has determined is substantially compliant with State law while waiting for HCD to complete its review of the Housing Element is sufficient to comply with State Housing Element law and avoid the Builder's Remedy, though HCD has not endorsed this interpretation. More detail on this issue is included under "What future legal developments might be relevant to Builder's Remedy projects?"
6 Government Code § 65589.5, subd. (h)(2).
7 "Lower-income households" is defined in Health and Safety Code section 50079.6, and must be made available at a monthly housing cost that does not exceed 30 percent of 60 percent of the area median income.
8 "Moderate-income households" is defined in Health and Safety Code section 50093, and includes persons of families of middle income as defined in Government Code section 65008, and must be made available at a monthly housing cost that does not exceed 30 percent of 100 percent of the area median income.
9 Government Code, § 65589.5, subd (d);
10 October 5, 2022 Letter of Technical Assistance, Melinda Coy, Proactive Housing Accountability Unit Chief, Department of Housing and Community Development.
11 Alternatively, a Builder’s Remedy project may qualify for a CEQA exemption.