SoCal Developer: Builder's Remedy Not a Solution to Housing Crisis

A day after California’s Attorney General warned the City of Huntington Beach not to enact any new zoning laws blocking builder’s remedy housing projects, the Huntington Beach Planning Commission voted this week to approve a measure to ban building applications for builder’s remedy projects.

“We’re drawing a line in the sand. It just sends a clear message to developers to not even try,” Michael Gates, the city attorney in Huntington Beach said when the measure was approved.

The vote sets up the first major legal challenge to builder’s remedy, which is being imposed by the state on cities that fail to submit an approved housing growth plan.

Builder’s remedy is a legal remedy, created in the 1990s, that can be invoked to allow developers to bypass local zoning requirements—any kind of city zoning or planning approval process—essentially a state override of local authorities that now is being invoked in what the governor is calling a housing emergency.

The measure moving forward in Huntington Beach blocks building applications for housing construction filed under builder’s remedy on the grounds that the construction could “adversely impact public safety and the environment.”

California Attorney General Rob Bonta, in a letter to Huntington Beach city officials before the vote, told the city that any attempt to enact a measure blocking builder’s remedy would be illegal—the first time the state AG has publicly spoken about enforcing builder’s remedy.

“California is facing a housing crisis of epic proportions,” Bonta said, in a statement. “With today’s letter, we’re putting [Huntington Beach] on notice. Adopting the proposed ordinance and restricting housing production under the Builder’s Remedy would violate the law.”

Bonta’s public warning came a month after a warning to Huntington Beach from the state’s Housing and Community Development Department (HCD), the state agency that is approving housing plans for cities—and also imposing builder’s remedy on cities that don’t have approved plans.

Gov. Gavin Newsom has touted builder’s remedy as the teeth behind the state’s new housing law, preventing cities with housing shortages from “kicking the can down the road,” as the governor put it.

Not all builders of affordable housing in Southern California think builder’s remedy is the right tool to spur new housing developments across cities.

“For affordable [housing] developers, the builder’s remedy is a two-edged sword,” Jeff Edgren, director of acquisitions for San Diego-based developer Affirmed Housing, told GlobeSt. “If an affordable developer wants to get funding from a local government, then the builder’s remedy is probably not an option.”

“For market-rate developers attempting to use the builder’s remedy, the bigger issue is CEQA [California Environmental Quality Act] approval,” Edgren said.

“The underlying premise—the idea that the builder’s remedy allows unlimited zoning to produce more housing—was the intent, but the reality is that without exemption from CEQA, the builder’s remedy is only a paper tiger with no real teeth,” he said, adding that there are “bad actors who hide behind CEQA,” citing environmental concerns to block new housing development.

Edgren encouraged cities to avoid using builder’s remedy to spur new housing projects by instead filing a Housing Element General Plan with the HCD that can gain its approval.

“This is a low-compliance threshold, requiring local governments only to rezone properties in their jurisdiction to accommodate projected housing needs. It doesn’t require them to build any of the housing,” Edgren told GlobeSt.

Affirmed Housing is expecting to deliver 746 new apartment units this year with 10 construction completions; it is planning to start construction in 2023 on an additional 453 homes.

The company’s latest completion is a mixed-use project—known as The Orchard at Hilltop, in San Diego—that combines affordable and market-rate developments in an urban-village setting built around a rebuilt arroyo that serves as a stormwater drain.

Affirmed took a dozen parcels and divided them in into three, the two residential developments and the rebuilt arroyo, a blue-line channel that connects to Chollas Creek.

The developer obtained permits from the Army Corps of Engineers, the Regional Water Control Board and Fish/Wildlife regulators in order to recontour the arroyo to better align it with the overall master plan development. Affirmed also connected Hilltop Drive—previously a dead end—with the 94 Freeway.