A courtroom is not the location to settle disputes over regional fair-share housing allocations. So ruled the Fourth District Court of Appeal on June 30 in a closely watched case involving the City of Irvine. As a result of the ruling, the city apparently is stuck with having to plan for development of 35,000 additional housing units � equal to about half of its existing inventory � over the next five years.

The appellate court's decision bolsters the authority of the Southern California Association of Governments and other councils of government (COGs) that allocate fair-share housing numbers to cities and counties. The decision raises questions about local governments' planning authority.

If the Fourth District rejects Irvine's request for reconsideration, the city will almost certainly appeal to the state Supreme Court. "We simply don't agree with the court's analysis and conclusions," said Rutan & Tucker's Philip Kohn, who represents Irvine in the litigation. The appellate court's decision amounts to an "erosion of local control," he said.

If the ruling stands, Irvine will be responsible for accommodating about 43% of Orange County's projected housing needs during the 2006-2014 planning period, a mandate that Irvine leaders say is unfair and infeasible.

"We try to balance housing and job opportunities," Irvine Mayor Sukhee Kang told the Orange County Register. "Looking at the overall housing vision for the county, we feel that what is required out of Irvine is inequitable."

John Edney, an El Centro city councilman and SCAG president, backed the court's decision but acknowledged the difficulty Irvine faces as a result of it. "SCAG will continue to work with all of its member agencies on the Regional Housing Needs Assessment in a collaborative and transparent manner, and in compliance with the law," Edney promised.

Kenneth Moy, general counsel for the Association of Bay Area Governments, which supported SCAG in the Irvine lawsuit, said the case was correctly decided. If the court had gone the other way, it would have thrown a monkey wrench into the whole Regional Housing Needs Assessment (RHNA) process, he said.

"On balance," Moy said of the ruling, "it preserves the integrity of the process for all the participants in the RHNA process. I don't think it affects how ABAG will conduct future RHNA allocations."

Two years ago, the cities of Palmdale and La Mirada filed similar suits against SCAG over the fair-share housing allocations. But, like with Irvine's, the suits were dismissed because trial courts said they have no jurisdiction to hear the disputes. Although more than 20 other cities signed onto amicus briefs in support of the lawsuits, the League of California Cities has remained officially neutral.

The Regional Housing Needs Assessment process is laid out in Government Code � 65584, et seq. The law requires the state Department of Housing and Community Development (HCD) to consult with a region's COG to establish the region's existing and projected housing needs. The COG then works with its cities and counties on a methodology for allocating the housing needs among them. After the COG prepares a draft RHNA allocation based on the methodology, cities and counties may appeal to the COG's appeals board. Because a successful appeal typically requires the COG to re-allocate units to other jurisdictions, few cities or counties get far with their appeals. Once appeals are exhausted, the COG adopts a final allocation plan, which is subject to review and approval by HCD. Cities and counties then must update their housing elements to reflect the RHNA allocations for very low-, low-, moderate- and above-moderate income housing units. Housing elements typically analyze housing needs, identify land where housing may be developed, and list policies and programs to promote affordable unit development. Final authority for certifying housing elements rests with HCD.

In 2004, lawmakers approved SB 2158 (Lowenthal), which revised the RHNA process to give cities and counties greater say in allocations. The revision also spread the affordable housing burden more evenly, promoted infill development and tightened the relationship between housing and jobs.

The penalties for not having a certified housing element used to be minimal. However state lawmakers in recent years have tied eligibility for certain pots of money to housing element certification. Last year's SB 375 further modified the housing element law by establishing new planning horizons, requiring more up front zoning for housing up front and giving advocates greater authority to sue over housing plans.

For the planning period from 2006 through June 30, 2014, SCAG utilized an allocation methodology that considered availability of land suitable for urban development, underutilized parcels and opportunities for infill and increased densities. The methodology also aimed to allocate very low- and low-income units more equitably across the region.

In early 2007, SCAG used this methodology to allocate Irvine 35,300 housing units, about 60% of which were to be in the very low-, low- and moderate-income categories. Among the factors in the allocation were Irvine's huge job base � the city was home to about 190,000 jobs in 2007, or nearly three jobs for every one housing unit � the city's annexation of 3,000 acres and its jurisdiction over 4,000 acres of the decommissioned El Toro Marine Corps base.

Irvine protested, saying most the annexed land was protected by a habitat plan, and the majority of the El Toro site was designated for the Orange County Great Park or environmental mitigation by the Navy. In its plea to SCAG's RHNA appeals board, Irvine agreed to accept an allocation of 8,800 units. The appeal failed, and Irvine was subsequently given an additional 300 units.

Irvine then sued SCAG, arguing the association was violating the state RHNA law (see CP&DR, September 2007). No court, however, has ever considered Irvine's argument. Orange County Superior Court Judge William Monroe dismissed the lawsuit, finding he had no jurisdiction under state law to hear the case.

On appeal, Irvine argued that Monroe's interpretation of the RHNA law was absurd because it would mean SCAG serves as the "final judge, jury and appellate tribunal" for any alleged violation of the law. Denied judicial review, cities have no remedy available, Irvine agued.

However, a unanimous three-judge panel of the Fourth District agreed with Monroe that the RHNA process is "immune from judicial intervention." The court disagreed, finding that no single entity has complete control of the RHNA scheme. The opinion by Justice William Rylaarsdam outlined all of the consultation and cooperative aspects required to be part of the process, as well as HCD's oversight role. The court also pointed to 2004 legislative amendments that repealed judicial review of COG housing allocations.

"Given the RHNA statutes' nature, their allowance for public input, and their lengthy and existing administrative procedure, it is clear the Legislature intended to eliminate resort to traditional judicial remedies to challenge a local government's regional housing needs allocation so as to avoid the disruption of local planning that would result from interference through the litigation process," Rylaarsdam wrote.

Two other portions of the opinion appear noteworthy. In one, the court hinted that Irvine could plan for fewer units than called for in the RHNA allocation. The court cited Government Code � 65883, subdivision (b)(2), which says that if identified housing needs exceed a jurisdiction's resources, a housing element's "quantified objectives need not be identical to the total housing needs." The court also cited a 2005 attorney general's opinion that interpreted the same law to mean a community may establish a maximum number of housing units below its RHNA allocation if it has insufficient resources to meet the RHNA needs (88 Ops.Cal.Atty.Gen. 84; see CP&DR Legal Digest, June 2005).

Kohn, the city's attorney, said the court appeared to be offering solace to Irvine. But he pointed out that housing element certification is up to HCD, not the city.

In another part of the opinion, the court stated, "The RHNA allocation process must be completed in advance of the revision of a municipality's general plan housing element." It is this procedural aspect the court desires to shield� because if it were disturbed, a reallocation of RHNA numbers could be required. "[A]llowing this judicial action to proceed would require the joining of all affected local jurisdictions in the lawsuit, thereby precluding each affected municipality's completion of its housing element revision," Rylaarsdam wrote.

In practice, however, HCD permits cities and counties to submit housing element updates before RHNA allocations are complete, as long as the city or county is willing to amend the element after the allocation is final. "Perhaps this will be the next RHNA issue to be resolved by litigation," Abbott & Kindermann attorney Katherine Hart wrote in an analysis of the decision.

Kohn said the court could fashion a remedy to Irvine's situation that does not implicate other jurisdictions' planning.

The Case:
City of Irvine v. Southern California Association of Governments, No. G040513, 2009 DJDAR 9783. Filed June 30, 2009.
The Lawyers:
For Irvine: Philip Kohn, Rutan & Tucker, (714) 641-3415.
For SCAG: Joanna Africa, Southern California Association of Governments, (213) 236-1928.