Most Bay Area cities missed the deadline to submit their housing plans. New penalties could be in store

A key plan to dramatically increase housing across the Bay Area fell flat this week as less than 15% of the region's cities and counties met the state's Tuesday cutoff to provide their homebuilding proposals.

Blowing the deadline means they could soon miss out on crucial state funding and be forced to approve new housing projects much larger than local laws now allow.

As of Wednesday afternoon, just 14 of the region's 109 cities and counties had submitted adopted plans, dubbed "housing elements," according to the California Department of Housing and Community Development. And so far, just two of those plans — from San Francisco and the city of Alameda — have received final approval from the state.

Still, it's far from certain how many cities and counties could face penalties. Unlike in past housing element cycles, the state — at the urging of pro-housing advocates and lawmakers — has made clear it intends to hold local officials accountable for doing their part to confront a deepening housing shortage.

Louis Mirante, vice president of public policy at pro-business Bay Area Council, said he expects to see a prolonged period of "intransigent wealthy local governments wrestling with the reality of the law, and with the consequences of not following it."

Local governments across California have failed for decades to meet their homebuilding goals. So in recent years, officials in Sacramento have phased in new laws and regulations to add teeth to the planning process.

In addition to bolstering penalties, the state now requires cities and counties to spell out how they plan to ease some restrictions on new multifamily housing, address local patterns of housing discrimination and ensure that areas they've identified for future homes have a realistic chance of development.

They also have to prepare for significantly more housing.

By 2031, the nine-county Bay Area is on the hook for approving more than 441,000 single-family homes, apartments, townhomes and condos for people of all income levels. That's double the amount of the previous eight-year cycle, representing a roughly 15% increase in the region's total housing stock, in large part to make up for years of sluggish homebuilding.

As a result, cities and counties are struggling — or in some cases refusing — to meet the state's increased planning expectations. Ahead of the deadline, only Alameda, San Francisco, Emeryville and Redwood City had received initial approvals on their housing elements drafts. And 15 local governments, including Cupertino, Newark and Santa Clara and Alameda counties failed to even submit drafts, according to state data.

The main penalty worrying many local officials without finalized eight-year housing plans? The so-called "builder's remedy."

The provision in state housing law could enable developers to push through projects of virtually any size almost anywhere they please, as long as a portion of the building includes affordable units. Experts agree it's most likely to come into play in wealthier areas that have long made it difficult to build denser housing but where developers stand to see higher profits if they can build.

"Loss of zoning control is something that everyone is universally opposed to," said Jordan Grimes, a housing policy expert with the Bay Area nonprofit Greenbelt Alliance. "You don't do your homework and you lose your television privileges, and that's essentially what happens."

It's already starting in Southern California, where over a hundred cities are behind on their housing plans, due in 2021, and developers have blitzed a handful of affluent enclaves with proposals for massive apartment complexes with thousands of units.

Even so, Grimes acknowledged the builder's remedy hasn't been legally tested. One potential sticking point is whether local officials can deny builder's remedy proposals by simply adopting their housing elements into law without state certification. Another question is whether a builder's remedy project would still be valid if a city's housing plan gets state approval after a developer has submitted a proposal.

"Most advocates expect there to be litigation around the issue," Grimes said. "So much of this is untested."

One more looming penalty for local governments is losing out on critical state affordable housing and infrastructure grants. But experts and advocates agree that state officials likely won't start withholding money for at least a few months. Some cities, such as San Jose, may even be able to apply for funding while they work toward submitting their final housing plans.

Daniel Saver, an assistant director with the Association of Bay Area Governments, a regional agency that helps set local housing goals, said there are many "gray areas" regarding when cities and counties can receive funding depending on where they are in the housing element process. He said he doesn't expect "a doomsday scenario in the Bay Area."

But local governments that have resisted the housing element process — including in wealthy suburban cities such as San Mateo, Atherton and Pleasanton — may face even more penalties in the future should they fail to make a good-faith effort on their plans.

That includes hefty fines of up to $100,000 a month and lawsuits aimed at compelling a judge to take over the process of approving and permitting new homes, said Mirante.

"But that's a remedy that's much further down the road than any local government is going to be this week," he said.

The cities and counties that had submitted adopted housing elements by Wednesday include San Francisco, Los Altos, Colma, San Carlos, San Mateo, South San Francisco, Alameda, Dublin, Emeryville, Fremont, San Leandro, Moraga, Rohnert Park and Sebastopol.

Others are likely to follow in the coming days and weeks. But just because a plan has been adopted, it doesn't necessarily mean the state will approve it. Last month, Dublin's adopted plan, for instance, was the first to be rejected.