What Every Developer Should Know About the Builder’s Remedy
Every so often, an overlooked provision in a statute catches local governments and developers by surprise. This certainly is the case with what has become almost a media phenomenon, the so-called “Builder’s Remedy.” Many local governments view this provision of the Housing Accountability Act with alarm, while many developers see it as an opportunity to gain a mandatory approval for a project that does not meet all applicable zoning and other development standards. The Builder’s Remedy has become the most recent lightning rod in the already heated discussion over the state’s housing supply crisis, caused in part by burdensome zoning restrictions and lengthy review procedures that can impede housing production.
The courts have yet to interpret the Builder’s Remedy provisions or evaluate the use of a Builder’s Remedy approach to project approval. In addition, every jurisdiction and project is unique. As such, there are many unknowns associated with the Builder’s Remedy, and a case-by-case analysis is required. Nonetheless, we offer below answers to some of the most frequently asked questions about the Builder’s Remedy.
- What is it? The Builder’s Remedy prohibits a local government that has not adopted a housing element in substantial compliance with the Housing Element Law from disapproving a qualifying project or conditioning approval in a way that would make the project infeasible for affordable housing, even if the project is inconsistent with both the zoning ordinance and general plan land use designation. To qualify for the Builder’s Remedy, the housing development project must provide 20 percent of its units for lower-income households or 100 percent for moderate-income or middle-income households.
A local government can be out of compliance with the Housing Element Law in several ways. In the simplest terms, a local government is not in compliance until it has adopted a Housing Element and, according to the state Department of Housing and Community Development (HCD), HCD has certified the adopted housing element to be in substantial compliance with the state Housing Element Law.
- Why are people talking about it now? Housing elements generally must be updated every eight years (called a cycle). The 5th cycle recently ended, and jurisdictions have submitted or are submitting their 6th cycle Housing Elements. In the Bay Area, for example, the 6th cycle housing element was due for submittal to HCD on January 31, 2023. Housing elements for governments in the Southern California Association of Governments (SCAG) region were due on October 15, 2022. However, many jurisdictions missed the deadline or are responding to HCD’s comments on their housing elements. According to HCD’s website, as of April 17, 2023, of the Bay Area’s 109 jurisdictions, only 16 are in compliance. Of the 197 jurisdictions in the SCAG region, 98 are in compliance. The Housing Elements for local governments in several other areas, such the Monterey Bay area, Fresno County, and San Joaquin County, are due later this year. HCD reviews housing elements on an ongoing basis, and it is due to issue determinations for those jurisdictions that resubmitted housing elements for certification in the near future. Thus, for developers considering utilizing the Builder’s Remedy, it is important to check the compliance status of a local government’s housing element.
- How do you apply? The Housing Accountability Act does not prescribe a specific Builder’s Remedy application. HCD issued guidance that a preliminary application filed under SB 330 locks in the noncompliant status of the Housing Element so that subsequent compliance by the local government will not invalidate a Builder’s Remedy application submitted prior to compliance. This approach is sometimes referred to as “vesting” the jurisdiction’s noncompliant status. An SB 330 preliminary application is a short application, in a form prescribed by statute and local implementing checklists, that provides basic project information and includes a site plan and elevations. Other submittals that might accompany the SB 330 preliminary application could include, for example, a separate statement explaining that the project is relying upon the Builder’s Remedy and does not need to be consistent with the zoning ordinance or general plan land use designation. Designing a project and completing the preliminary application can take a substantial amount of time and, with many local governments racing to obtain compliant housing elements, developers will want to ensure there is adequate time to submit the application before the local government comes into compliance.
- What is the approval process? The Housing Accountability Act is silent on how a local government must process a Builder’s Remedy application. For example, a local government may determine that a project must go through a process for design/architectural review, use permits, and other planning approvals, even though the Housing Accountability Act provides that a local government may not deny a qualifying housing development project that does not satisfy the zoning and general plan land use designation. Notably, the statute does provide that local governments can require a project to comply with objective, quantifiable development standards consistent with meeting the jurisdiction’s share of the regional housing need. The application of CEQA to the Builder’s Remedy also is untested. Although the Housing Accountability Act explicitly states that it does not relieve the local government of making required CEQA findings or otherwise complying with CEQA, it does not foreclose the possibility that approval of at least some Builder’s Remedy projects will be ministerial and thus exempt from CEQA. In addition, given the Housing Accountability Act limitations of disapproval of Builder’s Remedy projects, CEQA review of Builder’s Remedy projects might be narrow in scope in light of CEQA case law holding that where an agency has limited discretion over a project, the CEQA review is equally limited.
- What are the risks? The Builder’s Remedy remains an uncharted approval pathway that is likely to face resistance from some local governments and stakeholders, which may exacerbate delays inherent in the project approval process. Some local governments may actively resist the Builder’s Remedy, either by self-certifying their Housing Elements, using CEQA to delay the process, or otherwise rejecting an application. A developer using the Builder’s Remedy may need to litigate to enforce its rights. Finally, the courts have yet to clarify the meaning of certain key provisions of the Builder’s Remedy or how the Builder’s Remedy interacts with other provisions in the Housing Accountability Act, CEQA, or the Subdivision Map Act. To date, approximately 40 reported Builder’s Remedy applications have been filed state-wide, which should provide some guidance soon regarding how local governments and, if litigation ensues, courts interpret the Builder’s Remedy.
The Builder’s Remedy is untested, and taking a Builder’s Remedy approach requires careful planning. If you would like to know more about the Builder’s Remedy or how to evaluate its use for your project, please contact any of our experienced land use attorneys.