The Association of Bay Area Governments has adopted a methodology for distributing fair-share housing units that directs housing growth to existing urban areas, especially those with jobs and transit, and downplays the trend of extensive development on the Bay Area's fringe.

The methodology was adopted in January by the Association of Bay Area Governments (ABAG) executive board in preparation for the next round of the regional housing needs allocation (RNHA) process. Past rounds of the RHNA have used more trend-based methodologies that assign large numbers of housing units to fast-growing communities and those with big pieces of undeveloped land. That approach, however, conflicts with the "Smart Growth Strategy/Regional Livability Footprint Project" that ABAG completed in 2002. The regional policies in the smart growth strategy encourage infill development, efficient land use that capitalizes on transit, a better jobs-housing balance and protection of agricultural areas.

The new RHNA methodology pulls housing away from greenfields on the urban fringe, "and directs that housing need toward our cities and our transit infrastructure," explained Ken Kirkey, ABAG planning director.

The methodology results in the assignment of substantially more housing units to the region's biggest cities and some older suburbs with transit and employment centers. San Jose, San Francisco and Oakland would be responsible for about 38% of the region's new housing units, up from about 23% in the last round. Cities such as Berkeley, Petaluma, Walnut Creek and Palo Alto would see their fair-share numbers increase dramatically from the last RHNA. Meanwhile, some bedroom communities on the fringe, such as Gilroy, Antioch, Vacaville and American Canyon, would see their fair-share numbers decrease significantly. In fact, more than half of the cities would see their allocations decline.

"It makes sense," said Gwen Regalia, Walnut Creek mayor pro tem and a member of ABAG's housing methodology committee, "to have more housing near a BART station than to have four units per acre in Brentwood, and then have all of those people drive over Ygnacio Valley Road."

The fair-share housing allocation process works like this: On a rotating, five-year basis— but often at longer intervals — the state Department of Finance and the Department of Housing and Community Development estimate how many new units California will need to house its population. The units are classified into four affordability levels — very low-income (affordable to people making up to 50% of a county's median income), low-income (50% to 80% of median), moderate-income (80% to 120% of median) and above moderate (more than 120% of median). State officials then assign housing units to regions of the state. Councils of government divide up the regional share among their member cities and counties. The numbers provide the basis for city and county general plan housing elements. By law, cities and counties are supposed to designate property and adopt policies that permit the locality to provide for its fair share of housing units at each of the four income levels.

ABAG last completed a RHNA process in 2000, followed by housing element updates in 2001, for the 2000-2007 time period. Originally, ABAG was to complete a new RHNA in 2006, with local governments completing housing element updates this year. However, state officials postponed things for two years, partly because of financial concerns. Now, ABAG is scheduled to complete its final allocations in June 2008, with housing element updates due on June 30, 2009.

ABAG took a collaborative approach to designing its methodology for distributing units this time. A 34-member housing methodology committee spent months creating and gathering input on the methodology. Ultimately staff recommended slightly less reliance on transit as a weighted factor than the committee recommended, and the ABAG Executive Board approved the staff recommendation in January (see sidebar). The Southern California Association of Governments has adopted similar "smart growth" principles for its RHNA, although details of SCAG's methodology are different than those adopted by ABAG (see CP&DR Insight, August 2006).

Underlying ABAG's methodology is the "Projections" document that ABAG adopted five years ago. Rather than forecasting growth based on trends, Projections provides a policy-based look at the future. And that policy is heavy on infill and transit-oriented development.

Regalia, a former ABAG president, has some quibbles about the methodology but endorsed the overall approach. "I agree that more development should go to communities that have transportation. That includes my city, and not everybody is going to be happy about it," she said.

Such an approach reflects not only good planning, but demographic change, she said. Older people are happy to give up suburban homes and the accompanying upkeep for a condominium. Young professionals want to live in a downtown environment where amenities and transit are within walking distance, she said.

Michael Moore, City of Petaluma planning director, said he was not exactly sure why Petaluma, which was allocated about 1,100 units in the last RHNA, would see its assignment nearly double. But he suspects a major factor is the 400-acre Central Petaluma specific plan, which permits up to 60 units per acre.

"Our view is the methodology is as sound as it could be under the circumstances," Moore said. "Part of the crapshoot in this is that you do the methodology before you get the housing numbers."

Kirkey said that ABAG officials recognized that increased allocations place a burden on a community. Thus, ABAG is trying to provide incentives for jurisdictions that are assigned large housing shares. For example, ABAG is trying to align the RHNA with the Metropolitan Transportation Commission's regional transportation plan update so that cities with large housing burdens receive substantial transportation funding. In addition, because the largest cities also have big shares of the region's existing very low- and low-income housing units, the methodology attempts to spread the affordable housing burden more regionally. The methodology contains a "175% factor." The difference between a jurisdiction's percentage of a certain type of units and the regional average is multiplied by 175%, and the jurisdiction's RHNA share is assigned accordingly. For example, 36% of existing units in Oakland are very low-income. The regional proportion of very low-income units is 23%. So the difference is –13. That figure is then multiplied by 175%, for an adjustment factor of about –23. Thus, 13% of Oakland's assigned units will be very low-income units, based on the existing 36% minus the adjustment factor of 23.

"This is a pretty significant departure from the past," said Kirkey, who noted that previous allocations assigned income percentages equally for every jurisdiction. "If larger jurisdictions such as Oakland are being expected to take on such large shares of the overall housing need, they should not be burdened with having to accept so much of the low-income housing."

While the new methodology has gained majority support from the ABAG Executive Board, detractors exist. A coalition of housing and social justice advocacy groups argues that the methodology is a step backward because it will result in about two-thirds of Bay Area cities getting smaller fair-share allocations.

"They are calling it smart growth, but in reality it is a very narrow interpretation of smart growth that is construed around fixed-rail and ferry buildings," said Paul Peninger, policy director for the Non-Profit Housing Association of Northern California (NPH). The methodology does not account for corridors with good bus service, which were identified previously as candidates for high-intensity growth.

A letter signed by NPH Executive Director Diane Spaulding and endorsed by nine other organizations states: "Essentially, placing such a disproportionate share of the allocation in a few jurisdictions effectively produces a net loss in total regional capacity. Whether intentional or not, the … methodology amounts to a way of reducing the total regional housing needs allocation by directing a disproportionate share to communities that under any methodology would already be doing the most to plan for and develop housing."

Peninger said the groups recommend an approach based solely on household and employment growth projections, which, he noted, already incorporate transit-oriented development and smart growth policies.

Indeed, some cities have made a similar argument — that the methodology amounts to a doubling up of smart growth criteria because it starts from smart growth projections and adds smart growth weighted factors. These cities argue that there is only so much they can do to plan for infill and transit-oriented development, and the market for such housing is only so large.

"While planners may agree, from a sustainability point of view, that ‘it is better to go up than out,' it is the market that largely decides what gets built and when," Berkeley Planning and Development Director Dan Marks wrote to ABAG shortly before the Executive Board voted. "There is little evidence that the market can and will build the housing that would be expected under the draft ABAG allocations."

"[O]ther cities will be required to plan and accommodate far less housing than in the previous RHNA cycle," wrote Marks, whose city's allocation would more than double under the new methodology. "If the housing is not being planned in areas where it is comparatively easy to build, and the market does not accommodate housing at a sufficient rate in existing built-up cities, no matter how laudable the goal, the net result is insufficient regional housing production relative to need."

At the same time, other people are cheering the methodology, including environmentalists and supervisors in counties with city-centered growth policies. The methodology dramatically reduces the number of units assigned to unincorporated portions of Sonoma, Solano, Napa and Santa Clara counties, and cuts the overall numbers assigned to Sonoma, Solano and Napa counties and their cities.

Linda Wheaton, HCD assistant deputy director, said state officials did not provide input on ABAG's new methodology, but they will review it as part of the regional allocation process.

ABAG's schedule calls for state officials to determine the nine-county region's housing need in March. ABAG will then release draft allocations to cities and counties by the end of June, starting a one-year process of finalizing the allocations.


Ken Kirkey, Association of Bay Area Governments, (510) 464-7955.

Gwen Regalia, Walnut Creek vice mayor, (925) 943-5812.

Michael Moore, City of Petaluma, (707) 778-4301.

Paul Peninger, Non-Profit Housing Association of Northern California, (415) 989-8160.

Linda Wheaton, Department of Housing and Community Development, (916) 327-2642.

ABAG RHNA website:


ABAG's Weighted Factors

The Association of Bay Area Government's regional housing needs allocation (RHNA) assigns each city and county a share of the housing need. Each share is based on a methodology that is a mathematical equation consisting of weighted factors. These factors are based on state RHNA law and objectives, local land use policies and regional policies.

The weighted factors are:

• Housing growth — 45%. This factor is based on local land use policies and plans; demographic trends such as migration, and birth and death rates; economic trends such as housing prices and transportation costs; and regional growth policies. Much of this comes from ABAG's "Projections" report, which assumes there will be increased housing growth in existing urban areas, near transit stations and along major public transportation corridors.

• Existing employment — 22.5%. This factor derives from regional and local job data; and regional and local economic trends, such as the attractiveness of commercial and industrial locations, labor costs, housing prices and travel costs.

• Employment growth — 22.5%. This factor is based on local land use policies and plans; economic trends such as national and regional industrial forecasts; and regional policies.

• Household growth near transit, and job growth near transit — 5% apiece. These two factors are based on potential development within half a mile of existing rail stations and ferry terminals.


San Mateo County Tries Own Approach

For the first time, one county in the Association of Bay Area Governments region will make its own fair-share housing allocations. Under this "subregional process," ABAG will provide a regional housing needs allocation to San Mateo County as a whole. The San Mateo City/County Association of Governments (C/CAG) will then divide up the units among the county and the 20 cities. ABAG will review the draft allocations, but C/CAG will submit its numbers directly to the Department of Housing and Community Development, according to Gillian Adams, a regional planner for ABAG.

The methodology that C/CAG will use is still under development, said Duane Bay, San Mateo County housing director and an organizer of the subregional process. Bay anticipates that the final numbers may not be a whole lot different than what ABAG would have assigned to the cities and county.

"It's local control, that's what it comes down to," Bay said. "It really is all about the process and taking responsibility. It's not really about the numbers."

Bay explained things this way: The population of San Mateo County is about 700,000, which falls between the population of San Francisco and the population of Oakland. And under ABAG's recently approved methodology, San Mateo County as a whole would get a housing allocation that falls between the number assigned to San Francisco and the figure given to Oakland. But San Francisco or Oakland, as one jurisdiction, can decide where and how to accommodate its housing allocation. San Mateo County has 21 jurisdictions, but would also like to decide where and how to accommodate housing within the county as a whole.

The subregional process permits cities and the county to "trade" allocations, which was a significant factor in getting C/CAG members to agree to the process. Bay envisions one city accepting a portion of the housing units assigned to another city in exchange for resources such as water or money.

Whether the process actually results in development of more units — the ultimate measuring stick — is unknown, Bay conceded. At the very least, though, it should get planners and elected officials to take a more regional view and consider their neighbors' resources and constraints, he said.

The last RHNA assigned San Mateo County and its cities a total of 16,300 units, but developers have produced only about half of those units, partly because of the area's slow-growth politics. The ABAG methodology would boost the county's total allocation by about 10%.

Paul Peninger, policy director for the Non-Profit Housing Association of Northern California, said it is too early to reach any conclusions about San Mateo County's subregional process. But if it gets people thinking about their role in meeting the regional need, it could be a success, he said.