Audit underscores housing element challenges and calls for increased support for cities

By Brady Guertin, legislative advocate, and Brian Hendershot, Cal Cities Advocate managing editor

The California State Auditor last week released a review of the state’s housing element process. The audit, requested by former Sen. Steve Glazer, found that while the Department of Housing and Community Development (HCD) has met its legal requirements during the current housing element cycle, there is still plenty of room for improvement.

The audit re-emphasized many of the challenges local governments have expressed in recent years, noting that the current cycle was more complex to navigate due to new state housing laws. Many of the audit’s recommendations are in line with Cal Cities’ longstanding calls for more individualized, timely assistance from HCD, as well as more time to work on housing elements in general.

What did the audit find?

The audit examined 10 counties and cities, as well as HCD. The report found that the median time from when a local agency submitted its draft housing element and received HCD’s approval exceeded one year — 126% longer than in the fifth cycle. Many cities submitted multiple rounds of revisions before receiving certification from HCD. Jurisdictions submitted a median of three drafts before achieving compliance, up from two during the last housing cycle.

The report attributes these delayed submittals in part to new legal requirements, community opposition to housing, increased housing allocations, challenges with consultants, and workload issues at HCD.

According to the report, HCD provided precise, measurable feedback on time, as required by state law. However, the guidance was not prescriptive. According to the audit, HCD staff didn't distinguish between a suggestion and a legislative requirement when providing feedback. Nor did they always release timely guidance on new state laws. The report attributes some of the department’s deficiencies to higher turnover, incomplete training, increased legal complexity, and purposely broad state laws.

Ultimately, the report determined that new site analysis and fair housing laws were the most likely explanations for the increased number of drafts and longer timelines among local governments. (In both cases, HCD provided guidance over a year after the laws took effect.) Many jurisdictions did not receive guidance on key issues until they had started their drafts or were in the middle of their review process.

All in all, the auditor concluded that HCD needs to provide more individualized assistance and support for local jurisdictions — which it characterized as “critical to shortening the approval process.” In its recommendations, the auditor urged the agency to adopt consistent language and address workforce challenges.

The auditor also suggested that lawmakers stagger housing element deadlines on a regional basis to reduce workload issues and establish incentives for cities that complete their elements early.

The report did not provide any suggestions related to local challenges, including consultant-created logjams and community opposition to approved housing elements.

HCD said that it largely agreed with the report's findings and will implement the suggested changes. In its response, it cited “extreme workload conditions,” which created “unique challenges” for both the department and local governments. However, it told the auditor that the Legislature would need to implement a transition period for new housing laws before it could provide guidance on the new requirements.

What is Cal Cities’ response?

Cal Cities has long called for many of the changes recommended by the auditor, including giving cities more time to analyze and prepare for new housing laws. In 2024, Cal Cities worked with Glazer and supported his request for the audit.

Last year, Cal Cities sponsored AB 650 (Papan), which would have given cities more time to complete their housing elements, improved clarity in the review process, and addressed some of the challenges the auditor found in its report. Despite unanimous bipartisan support in both houses, Gov. Gavin Newsom vetoed the bill.

Given the audit results, Cal Cities hopes to work with the Legislature and the Governor on a revamped measure that will address many of the solutions to the challenges identified in the audit. Additionally, Cal Cities will urge lawmakers to provide further clarity in the housing element review process and establish temporary protection from the increasingly punitive accountability measures for cities that are actively working diligently and in good faith with HCD to complete their housing elements.

Overall, Cal Cities believes the audit underscores what cities have been discussing for several years about the housing element review process: The current process is inconsistent, not always timely, and sometimes unfair. Many cities worry that these problems will compound during the next housing cycle due to new laws and extended review times.

Cal Cities believes that the proposed recommendations in the audit are a good starting point. However, much more is needed to ensure cities have the resources and support they need to get their housing elements approved and certified on time, especially as the 7th Regional Housing Needs Allocation cycle begins soon.