07-08-20 Searchable PacketCITY OF CUPERTINO
CITY COUNCIL
AGENDA
This will be a teleconference meeting without a physical location.
Wednesday, July 8, 2020
4:30 PM
Televised Special Meeting
TELECONFERENCE / PUBLIC PARTICIPATION INFORMATION TO HELP STOP THE
SPREAD OF COVID-19
In accordance with Governor Newsom’s Executive Order No-29-20, this will be a
teleconference meeting without a physical location to help stop the spread of COVID-19.
Members of the public wishing to observe the meeting may do so in one of the following
ways:
1) Tune to Comcast Channel 26 and AT&T U-Verse Channel 99 on your TV.
2) The meeting will also be streamed live on and online at www.Cupertino.org/youtube
and www.Cupertino.org/webcast
Members of the public wishing comment on an item on the agenda may do so in the
following ways:
1) E-mail comments by 3:30 p.m. on Wednesday, July 8 to the Council at
citycouncil@cupertino.org. These e-mail comments will also be forwarded to
Councilmembers by the City Clerk’s office before the meeting and posted to the City’s
website after the meeting.
2) E-mail comments during the times for public comment during the meeting to the City
Clerk at cityclerk@cupertino.org. The City Clerk will read the emails into the record, and
display any attachments on the screen, for up to 3 minutes (subject to the Mayor’s
discretion to shorten time for public comments). Members of the public that wish to share a
document must email cityclerk@cupertino.org prior to speaking.
3) Teleconferencing Instructions
Members of the public may provide oral public comments during the teleconference
meeting as follows:
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City Council Agenda July 8, 2020
Oral public comments will be accepted during the teleconference meeting. Comments may
be made during “oral communications” for matters not on the agenda, and during the
public comment period for each agenda item.
To address the City Council, click on the link below to register in advance and access the
meeting:
Online
Register in advance for this webinar:
https://cityofcupertino.zoom.us/webinar/register/WN_fKzSt6FeTA-8w1e5nKo9Sw
Phone
Dial: (888) 788 0099 and enter Webinar ID: 990 3217 4978 (Type *9 to raise hand to speak).
Unregistered participants will be called on by the last four digits of their phone number.
Or an H.323/SIP room system:
H.323:
162.255.37.11 (US West)
162.255.36.11 (US East)
Meeting ID: 990 3217 4978
SIP: 99032174978@zoomcrc.com
After registering, you will receive a confirmation email containing information about
joining the webinar.
Please read the following instructions carefully:
1. You can directly download the teleconference software or connect to the meeting in your
internet browser. If you are using your browser, make sure you are using a current and
up-to-date browser: Chrome 30+, Firefox 27+, Microsoft Edge 12+, Safari 7+. Certain
functionality may be disabled in older browsers, including Internet Explorer.
2. You will be asked to enter an email address and a name, followed by an email with
instructions on how to connect to the meeting. Your email address will not be disclosed to
the public. If you wish to make an oral public comment but do not wish to provide your
name, you may enter “Cupertino Resident” or similar designation.
3. When the Mayor calls for the item on which you wish to speak, click on “raise hand.”
Speakers will be notified shortly before they are called to speak.
4. When called, please limit your remarks to the time allotted and the specific agenda topic.
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City Council Agenda July 8, 2020
In compliance with the Americans with Disabilities Act (ADA), anyone who is planning to
attend this teleconference City Council meeting who is visually or hearing impaired or has
any disability that needs special assistance should call the City Clerk's Office at
408-777-3223, at least 6 hours in advance of the Council meeting to arrange for assistance. In
addition, upon request, in advance, by a person with a disability, City Council meeting
agendas and writings distributed for the meeting that are public records will be made
available in the appropriate alternative format.
NOTICE AND CALL FOR A SPECIAL MEETING OF THE CUPERTINO CITY COUNCIL
NOTICE IS HEREBY GIVEN that a special meeting of the Cupertino City Council is hereby
called for Wednesday, July 8, 2020, commencing at 4:30 p.m. In accordance with Governor
Newsom’s Executive Order No-29-20, this will be a teleconference meeting without a
physical location. Said special meeting shall be for the purpose of conducting business on
the subject matters listed below under the heading, “Special Meeting."
SPECIAL MEETING
ROLL CALL
ORAL COMMUNICATIONS
This portion of the meeting is reserved for persons wishing to address the Council on any matter within
the jurisdiction of the Council and not on the agenda. The total time for Oral Communications will
ordinarily be limited to one hour. Individual speakers are limited to three (3) minutes. As necessary, the
Chair may further limit the time allowed to individual speakers, or reschedule remaining comments to
the end of the meeting on a first come first heard basis, with priority given to students. In most cases,
State law will prohibit the Council from discussing or making any decisions with respect to a matter
not listed on the agenda.
ORDINANCES AND ACTION ITEMS
1.Subject: Review of the California Department of Housing and Community
Development’s (HCD’s) Regional Housing Needs Determination (RHND) for the Bay
Area region; consider the draft letters proposed by the Mayor calling for the
Association of Bay Area Governments (ABAG) Executive Board to appeal the RHND;
provide any input and/or authorize a letter to be sent on behalf of the City.
Recommended Action: That the City Council:
1. Review HCD’s RHND for the Bay Area region;
2. Review the draft letters proposed by the Mayor calling for the ABAG Executive
Board to appeal the RHND (Attachment A) and provide input
3. Consider whether to authorize the Mayor to send a letter.
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City Council Agenda July 8, 2020
Staff Report
A - Mayor's Draft Letters to ABAG Alt 1 2 and 3
B - HCD Memo re Bay Area RHND
C - ABAG Staff Report dtd 6-18-2020
D - Govt. Code Sec. 65584.01
ADJOURNMENT
The City of Cupertino has adopted the provisions of Code of Civil Procedure §1094.6; litigation
challenging a final decision of the City Council must be brought within 90 days after a decision is
announced unless a shorter time is required by State or Federal law.
Prior to seeking judicial review of any adjudicatory (quasi-judicial) decision, interested persons must
file a petition for reconsideration within ten calendar days of the date the City Clerk mails notice of the
City’s decision. Reconsideration petitions must comply with the requirements of Cupertino Municipal
Code §2.08.096. Contact the City Clerk’s office for more information or go to
http://www.cupertino.org/cityclerk for a reconsideration petition form.
In compliance with the Americans with Disabilities Act (ADA), anyone who is planning to attend this
teleconference meeting who is visually or hearing impaired or has any disability that needs special
assistance should call the City Clerk's Office at 408-777-3223, at least 6 hours in advance of the
meeting to arrange for assistance. In addition, upon request, in advance, by a person with a disability,
meeting agendas and writings distributed for the meeting that are public records will be made available
in the appropriate alternative format.
Any writings or documents provided to a majority of the Cupertino City Council after publication of
the packet will be made available for public inspection in the City Clerk’s Office located at City Hall,
10300 Torre Avenue, during normal business hours and in Council packet archives linked from the
agenda/minutes page on the Cupertino web site.
IMPORTANT NOTICE: Please be advised that pursuant to Cupertino Municipal Code 2.08.100
written communications sent to the Cupertino City Council, Commissioners or City staff concerning a
matter on the agenda are included as supplemental material to the agendized item. These written
communications are accessible to the public through the City’s website and kept in packet archives. You
are hereby admonished not to include any personal or private information in written communications to
the City that you do not wish to make public; doing so shall constitute a waiver of any privacy rights
you may have on the information provided to the City.
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CITY OF CUPERTINO
Legislation Text
Subject: Review of the California Department of Housing and Community Development’s (HCD’s)
Regional Housing Needs Determination (RHND) for the Bay Area region; consider the draft letters
proposed by the Mayor calling for the Association of Bay Area Governments (ABAG) Executive
Board to appeal the RHND; provide any input and/or authorize a letter to be sent on behalf of the
City.
That the City Council:
1. Review HCD’s RHND for the Bay Area region;
2. Review the draft letters proposed by the Mayor calling for the ABAG Executive Board to
appeal the RHND (Attachment A) and provide input
3. Consider whether to authorize the Mayor to send a letter.
File #:20-7829,Version:1
CITY OF CUPERTINO Printed on 7/7/2020Page 1 of 1
powered by Legistar™
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DRAFT Alternative Letter 1
For Discussion Purposes
City of Cupertino
10300 Torre Avenue
Cupertino, CA 95014
8 July 2020
Association of Bay Area Governments
Executive Board
375 Beale Street. Suite 700
San Francisco, CA 94105
Dear President Arreguin and Members of the Board,
On June 9, 2020, HCD announced a “Final Regional Housing Need Determination” of 441,176
new housing units for the nine county Bay Area. Under Government Code 65584.01 (c), the
Association of Bay Area Governments may file an objection to this determination within 30 days
or by July 10, 2020. This letter urges ABAG to file an objection to the 441,176 number.
The 441,176 housing unit number was based on the statement that HCD had considered all the
information specified under California Government Code 65584.01 (c). That section refers to
section 65584.01 (b) (1) (G) which clearly states “the council of governments shall provide data
assumptions from the council’s projections on the relationship between jobs and housing,
including any imbalances between jobs and housing”. Section 65584.01 (c) (1) further states
“the region’s existing and projected housing need shall reflect the achievement of a feasible
balance between jobs and housing within the region.” This has not been done.
The jobs to housing balance is especially of concern to Cupertino. Cupertino has turned down
multiple new commercial office projects in an effort to maintain our excellent jobs to housing
balance. We believed that an excellent jobs to housing balance would be reflected in our RHNA
number for the 2024-2032 cycle. Other Silicon Valley Cities, with poor jobs to housing balances,
continue to approve vast amounts of new office space without commensurate new housing ever
being built.
Code (Section 65890.5) requires HCD to prepare and publicly distribute a Guidebook that would
present “methodologies for measuring the balance of jobs and housing” and identifying
“incentives which local, regional and state agencies may offer the private sector to encourage
developments which will facilitate an improved balance between employment generating land
use and residential land use.” To our knowledge, no such Guidebook has been made available
for public discussion.
The Regional Housing Needs Distribution (RHND) presents a serious problem for Bay Area
cities. The RHND is based on an aggressive and unrealistic job growth projection for the Bay
Area and Silicon Valley, even before Covid-19.
CC 07-08-2020
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DRAFT Alternative Letter 1
For Discussion Purposes
Given the uncertainty of future job growth, the increase in remote-working, falling rents, and a
glut of unaffordable market-rate housing, it is critical for HCD to extend the date for RHND
finalization. HCD needs to assess the long term impacts of the Covid-19 pandemic, the outward
migration of both jobs and California residents, and the current recession, all of which are
resulting in considerable changes to development plans for property, both residential and
commercial.
The Covid-19 pandemic will permanently change jobs and housing patterns due to vastly
increased remote-working. Companies will be able to reduce the cost of office space, increase
productivity, reduce transportation costs, and modify salary structures to reflect lower cost of
living in areas where their employees relocate to. Due to the issues of disease transmission, as
it relates to housing density, people are now more reluctant to live in densely packed housing
which is the only possible type of housing in built-out cities with no empty land.
As you are no doubt aware, cities do not build housing. We zone parcels to create a Housing
Element that complies with our RHNA requirement and that Housing Element is approved by
HCD. We also approve projects that property owners submit to the City. However we have no
power to force the property owner to actually build their approved projects. All of the projects on
parcels in our current Housing Element were expected to be constructed. At the time the
entitlements were granted to the property owners, at their request, there was a huge demand for
market-rate housing and rental housing prices were on an upward spiral. That began to change
two years ago.
In the current RHNA cycle, Cupertino’s Housing Element has 1,408 units entitled, about 40%
higher than our RHNA number for the current cycle. 19 units have been built─a 100% affordable
senior apartment complex, with 18 studios and one manager’s unit. The City funded the
purchase of the land and a non-profit built the project with funding from a variety of sources.
800 units in our Housing Element have had plans submitted and approved; the property owners
have no plans to begin construction (these were approved pre-Palmer-fix and have a 10% BMR
requirement).
2,402 units were approved ministerially via SB-35 (1,201 market rate units and 1,201 BMR
units), but construction has not begun. Another 200+ RHNA units are in the process of having
plans submitted for approval, but there is no indication that the property owner will proceed with
construction.
Ten of the reasons that developers have cited for not using their RHNA entitlements and not
building their approved projects are as follows:
1. Weakening demand for market-rate rental housing especially because the income from
market-rate housing subsidizes the required Below Market Rate housing.
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DRAFT Alternative Letter 1
For Discussion Purposes
2. A surplus of market-rate housing in California. California currently has 1,100 housing
units for every 1000 households, but a severe shortage of affordable units.
3. The cost of construction due to higher labor costs.
4. Labor shortages, caused partially by the federal government’s immigration policies.
5. Cost of construction materials due to tariffs.
6. Loss of rental income during construction of new projects that are on the sites of
existing projects.
7. Fees charged by cities to cover necessary infrastructure improvements.
8. Fees imposed by school districts to fund school construction and expansion.
9. Fears of a recession that will further reduce demand for market-rate housing, further
exacerbated by Covid-19..
10. Increased remote-working causing further decreased demand for high-rent housing.
Another issue with HCD mandating clearly unattainable housing goals is that it will cause a
decrease in new Below Market Rate housing for families.
Many Cities in California, including Cupertino, have inclusionary housing requirements for new
projects. In Cupertino we require 15% inclusionary BMR housing. The BMR housing must be
built to the same size and quality standards as the market rate housing and it must be
distributed throughout the project. There is no option to pay in-lieu fees, we want the actual
BMR housing units.
What will occur when Cities are given unattainable RHNA goals is that SB-35 will kick in once a
city cannot meet its RHNA goals. A City’s BMR requirements will no longer apply under SB-35.
The developer will be able to build as little as 10% affordable housing and will be able to take
concessions that reduce the size of the BMR and affordable units, and be able to build the BMR
units to lower standards. This is not a wild theory. The City of Cupertino approved an SB-35
project with 50% BMR, 1,201 units. While we were thrilled to get so many BMR units, none of
those units are for families, every single one is a tiny unit with zero or one bedroom, and all of
the BMR will be built to lower standards than the market-rate housing.
Even before Covid-19, rents for market rate housing were falling in the Bay Area and property
owners were hesitant to begin construction on their approved projects. With Covid-19, we have
seen a huge increase in companies encouraging permanent remote-working for employees.
This has allowed employees to live in lower-cost areas where they can afford to purchase
homes and has reduced companies’ needs for commercial office space. This exodus from high-
CC 07-08-2020
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DRAFT Alternative Letter 1
For Discussion Purposes
cost areas has already had an effect on rental housing costs in the Bay Area, with rents, which
had already been falling in most cities, experiencing even steeper declines as the market-rate
housing glut worsens. This is not a temporary phenomenon.
We urge HCD to take the time to re-evaluate the Final Regional Housing Need Determination,
to look at the big picture, and take into account the long-term effects of the Covid-19 pandemic,
as well as the negative effect that unattainable RHNA numbers will ultimately have on the
construction of additional affordable housing. It would be inadvisable to adopt policies that will
worsen housing insecurity for lower-income Californians.
Sincerely,
Mayor Steven Scharf
On Behalf of the City Council of the City of Cupertino
cc: Therese W. McMillan, Executive Director, ABAG
Megan Kirkeby Acting Deputy Director, Department of Housing and Community Development
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DRAFT Alternative Letter 2
For Discussion Purposes
City of Cupertino
10300 Torre Avenue
Cupertino, CA 95014
8 July 2020
Association of Bay Area Governments
Executive Board
375 Beale Street. Suite 700
San Francisco, CA 94105
Dear President Arreguin and Members of the Board,
On June 9, 2020, HCD announced a “Final Regional Housing Need Determination” of 441,176
new housing units for the nine county Bay Area. Under Government Code 65584.01 (c), the
Association of Bay Area Governments may file an objection to this determination within 30 days
or by July 10, 2020. This letter urges ABAG to file an objection to the 441,176 number.
The 441,176 housing unit number was based on the statement that HCD had considered all the
information specified under California Government Code 65584.01 (c). That section refers to
section 65584.01 (b) (1) (G) which clearly states “the council of governments shall provide data
assumptions from the council’s projections on the relationship between jobs and housing,
including any imbalances between jobs and housing”. Section 65584.01 (c) (1) further states
“the region’s existing and projected housing need shall reflect the achievement of a feasible
balance between jobs and housing within the region.” This has not been done.
The jobs to housing balance is especially of concern to Cupertino. Cupertino has turned down
multiple new commercial office projects in an effort to maintain our excellent jobs to housing
balance. We believed that an excellent jobs to housing balance would be reflected in our RHNA
number for the 2024-2032 cycle. Other Silicon Valley Cities, with poor jobs to housing balances,
continue to approve vast amounts of new office space without commensurate new housing ever
being built.
Code (Section 65890.5) requires HCD to prepare and publicly distribute a Guidebook that would
present “methodologies for measuring the balance of jobs and housing” and identifying
“incentives which local, regional and state agencies may offer the private sector to encourage
developments which will facilitate an improved balance between employment generating land
use and residential land use.” To our knowledge, no such Guidebook has been made available
for public discussion.
The Regional Housing Needs Distribution (RHND) presents a serious problem for Bay Area
cities. The RHND is based on an aggressive and unrealistic job growth projection for the Bay
Area and Silicon Valley, even before Covid-19.
Given the uncertainty of future job growth, the increase in remote-working, falling rents, and a
CC 07-08-2020
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DRAFT Alternative Letter 2
For Discussion Purposes
glut of unaffordable market-rate housing, it is critical for HCD to extend the date for RHND
finalization. HCD needs to assess the long term impacts of the Covid-19 pandemic, the outward
migration of both jobs and California residents, and the current recession, all of which are
resulting in considerable changes to development plans for property, both residential and
commercial.
The Covid-19 pandemic will permanently change jobs and housing patterns due to vastly
increased remote-working. Companies will be able to reduce the cost of office space, increase
productivity, reduce transportation costs, and modify salary structures to reflect lower cost of
living in areas where their employees relocate to. Due to the issues of disease transmission, as
it relates to housing density, people are now more reluctant to live in densely packed housing
which is the only possible type of housing in built-out cities with no empty land.
Another issue with HCD mandating clearly unattainable housing goals is that it will cause a
decrease in new Below Market Rate housing for families.
Many Cities in California, including Cupertino, have inclusionary housing requirements for new
projects. In Cupertino we require 15% inclusionary BMR housing. The BMR housing must be
built to the same size and quality standards as the market rate housing and it must be
distributed throughout the project. There is no option to pay in-lieu fees, we want the actual
BMR housing units.
What will occur when Cities are given unattainable RHNA goals is that SB-35 will kick in once a
city cannot meet its RHNA goals. A City’s BMR requirements will no longer apply under SB-35.
The developer will be able to build as little as 10% affordable housing and will be able to take
concessions that reduce the size of the BMR and affordable units, and be able to build the BMR
units to lower standards. This is not a wild theory. The City of Cupertino approved an SB-35
project with 50% BMR, 1,201 units. While we were thrilled to get so many BMR units, none of
those units are for families, every single one is a tiny unit with zero or one bedroom, and all of
the BMR will be built to lower standards than the market-rate housing.
Even before Covid-19, rents for market rate housing were falling in the Bay Area and property
owners were hesitant to begin construction on their approved projects. With Covid-19, we have
seen a huge increase in companies encouraging permanent remote-working for employees.
This has allowed employees to live in lower-cost areas where they can afford to purchase
homes and has reduced companies’ needs for commercial office space. This exodus from high-
cost areas has already had an effect on rental housing costs in the Bay Area, with rents, which
had already been falling in most cities, experiencing even steeper declines as the market-rate
housing glut worsens. This is not a temporary phenomenon.
We urge HCD to take the time to re-evaluate the Final Regional Housing Need Determination,
to look at the big picture, and take into account the long-term effects of the Covid-19 pandemic,
as well as the negative effect that unattainable RHNA numbers will ultimately have on the
construction of additional affordable housing. It would be inadvisable to adopt policies that will
CC 07-08-2020
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DRAFT Alternative Letter 2
For Discussion Purposes
worsen housing insecurity for lower-income Californians.
Sincerely,
Mayor Steven Scharf
On Behalf of the City Council of the City of Cupertino
cc: Therese W. McMillan, Executive Director, ABAG
Megan Kirkeby Acting Deputy Director, Department of Housing and Community Development
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DRAFT Alternative Letter 3
For Discussion Purposes
City of Cupertino
10300 Torre Avenue
Cupertino, CA 95014
8 July 2020
Association of Bay Area Governments
Executive Board
375 Beale Street. Suite 700
San Francisco, CA 94105
Dear President Arreguin and Members of the Board,
On June 9, 2020, HCD announced a “Final Regional Housing Need Determination” of 441,176
new housing units for the nine county Bay Area. Under Government Code 65584.01 (c), the
Association of Bay Area Governments may file an objection to this determination within 30 days
or by July 10, 2020. This letter urges ABAG to file an objection to the 441,176 number.
The 441,176 housing unit number was based on the statement that HCD had considered all the
information specified under California Government Code 65584.01 (c). That section refers to
section 65584.01 (b) (1) (G) which clearly states “the council of governments shall provide data
assumptions from the council’s projections on the relationship between jobs and housing,
including any imbalances between jobs and housing”. Section 65584.01 (c) (1) further states
“the region’s existing and projected housing need shall reflect the achievement of a feasible
balance between jobs and housing within the region.” This has not been done.
Code (Section 65890.5) requires HCD to prepare and publicly distribute a Guidebook that would
present “methodologies for measuring the balance of jobs and housing” and identifying
“incentives which local, regional and state agencies may offer the private sector to encourage
developments which will facilitate an improved balance between employment generating land
use and residential land use.” To our knowledge, no such Guidebook has been made available
for public discussion.
The Regional Housing Needs Distribution (RHND) presents a serious problem for Bay Area
cities. The RHND is based on an aggressive and unrealistic job growth projection for the Bay
Area and Silicon Valley, even before Covid-19.
The Covid-19 pandemic will permanently change jobs and housing patterns due to vastly
increased remote-working. Companies will be able to reduce the cost of office space, increase
productivity, reduce transportation costs, and modify salary structures to reflect lower cost of
living in areas where their employees relocate to. Due to the issues of disease transmission, as
it relates to housing density, people are now more reluctant to live in densely packed housing
which is the only possible type of housing in built-out cities with no empty land.
CC 07-08-2020
13 of 23
DRAFT Alternative Letter 3
For Discussion Purposes
Another issue with HCD mandating clearly unattainable housing goals is that it will cause a
decrease in new Below Market Rate housing for families.
Many Cities in California, including Cupertino, have inclusionary housing requirements for new
projects. In Cupertino we require 15% inclusionary BMR housing. The BMR housing must be
built to the same size and quality standards as the market rate housing and it must be
distributed throughout the project. There is no option to pay in-lieu fees, we want the actual
BMR housing units.
What will occur when Cities are given unattainable RHNA goals is that SB-35 will kick in once a
city cannot meet its RHNA goals. A City’s BMR requirements will no longer apply under SB-35.
The developer will be able to build as little as 10% affordable housing and will be able to take
concessions that reduce the size of the BMR and affordable units, and be able to build the BMR
units to lower standards. This is not a wild theory. The City of Cupertino approved an SB-35
project with 50% BMR, 1,201 units. While we were thrilled to get so many BMR units, none of
those units are for families, every single one is a tiny unit with zero or one bedroom, and all of
the BMR will be built to lower standards than the market-rate housing.
Even before Covid-19, rents for market rate housing were falling in the Bay Area and property
owners were hesitant to begin construction on their approved projects. With Covid-19, we have
seen a huge increase in companies encouraging permanent remote-working for employees.
This has allowed employees to live in lower-cost areas where they can afford to purchase
homes and has reduced companies’ needs for commercial office space. This exodus from high-
cost areas has already had an effect on rental housing costs in the Bay Area, with rents, which
had already been falling in most cities, experiencing even steeper declines as the market-rate
housing glut worsens. This is not a temporary phenomenon.
We urge HCD to take the time to re-evaluate the Final Regional Housing Need Determination,
to look at the big picture, and take into account the long-term effects of the Covid-19 pandemic,
as well as the negative effect that unattainable RHNA numbers will ultimately have on the
construction of additional affordable housing. It would be inadvisable to adopt policies that will
worsen housing insecurity for lower-income Californians.
Sincerely,
Mayor Steven Scharf
On Behalf of the City Council of the City of Cupertino
cc: Therese W. McMillan, Executive Director, ABAG
Megan Kirkeby Acting Deputy Director, Department of Housing and Community Development
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STATE OF CALIFORNIA - BUSINESS, CONSUMER SERVICES AND HOUSING AGENCY GAVIN NEWSOM, Governor
DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT
DIVISION OF HOUSING POLICY DEVELOPMENT
2020 W. El Camino Avenue, Suite 500
Sacramento, CA 95833
(916) 263-2911 / FAX (916) 263-7453
www.hcd.ca.gov
June 9, 2020
Therese W. McMillan, Executive Director
Association of Bay Area Governments
375 Beale Street. Suite 700
San Francisco, CA 94105
Dear Therese W. McMillan,
RE: Final Regional Housing Need Determination
This letter provides the Association of Bay Area Governments (ABAG) its final Regional
Housing Need Determination. Pursuant to state housing element law (Government
Code section 65584, et seq.), the Department of Housing and Community Development
(HCD) is required to provide the determination of ABAG’s existing and projected
housing need.
In assessing ABAG’s regional housing need, HCD and ABAG staff completed an
extensive consultation process from March 2019 through May 2020 covering the
methodology, data sources, and timeline for HCD’s determination of the Regional
Housing Need. HCD also consulted with Walter Schwarm with the California
Department of Finance (DOF) Demographic Research Unit.
Attachment 1 displays the minimum regional housing need determination of 441,176
total units among four income categories for ABAG to distribute among its local
governments. Attachment 2 explains the methodology applied pursuant to Gov. Code
section 65584.01. In determining ABAG’s housing need, HCD considered all the
information specified in state housing law (Gov. Code section 65584.01(c)).
As you know, ABAG is responsible for adopting a methodology for RHNA allocation and
RHNA Plan for the projection period beginning June 30, 2022 and ending December 31,
2030. Pursuant to Gov. Code section 65584(d), the methodology to prepare ABAG’s
RHNA plan must further the following objectives:
(1)Increasing the housing supply and mix of housing types, tenure, and affordability
(2)Promoting infill development and socioeconomic equity, protecting environmental
and agricultural resources, and encouraging efficient development patters
(3)Promoting an improved intraregional relationship between jobs and housing
(4)Balancing disproportionate household income distributions
(5)Affirmatively furthering fair housing
Pursuant to Gov. Code section 65584.04(d), to the extent data is available, ABAG shall
include the factors listed in Gov. Code section 65584.04(d)(1-13) to develop its RHNA
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Therese W. McMillan Director
Page 2
plan, and pursuant to Gov. Code section 65584.04(f), ABAG must explain in writing how
each of these factors was incorporated into the RHNA plan methodology and how the
methodology furthers the statutory objectives described above. Pursuant to Gov. Code
section 65584.04(h), ABAG must submit its draft methodology to HCD for review.
Increasing the availability of affordable homes, ending homelessness, and meeting
other housing goals continues to be a priority for the State of California. To support
these goals the 2019-20 Budget Act allocated $250 million for all regions and
jurisdictions for planning activities through the Regional Early Action Planning (REAP)
and Local Early Action Planning (LEAP) Grant programs. ABAG has $ 23,966,861
available through the REAP program and HCD applauds ABAG’s efforts to engage
early on how best to utilize these funds and HCD looks forward to continuing this
collaboration. All ABAG jurisdictions are also eligible for LEAP grants and are
encouraged to apply to support meeting and exceeding sixth cycle housing element
goals. While the SB 2 Planning Grant deadline has passed, ongoing regionally tailored
technical assistance is still available through that program.
In addition to these planning resources HCD encourages local governments to consider
the many other affordable housing and community development resources available to
local governments that can be found at https://www.hcd.ca.gov/grants-
funding/nofas.shtml
HCD commends ABAG and its leadership in fulfilling its important role in advancing the
state’s housing, transportation, and environmental goals. ABAG is also recognized for
its actions in proactively educating and engaging its board and committees on the
RHNA process and the regional housing need, as well as creating tools to aid the public
understanding in the process. HCD especially thanks Paul Fassinger, Gillian Adams,
Aksel Olsen, Dave Vautin, Bobby Lu, Matt Maloney, and Elizabeth Bulgarin for their
significant efforts and assistance. HCD looks forward to its continued partnership with
ABAG and its member jurisdictions and assisting ABAG in its planning efforts to
accommodate the region’s share of housing need.
If HCD can provide any additional assistance, or if you, or your staff, have any
questions, please contact Megan Kirkeby, Acting Deputy Director, at
megan.kirkeby@hcd.ca.gov or Tom Brinkhuis, Housing Policy Specialist at (916) 263-
6651 or tom.brinkhuis@hcd.ca.gov.
Sincerely,
Megan Kirkeby
Acting Deputy Director
Enclosures
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ATTACHMENT 1
HCD REGIONAL HOUSING NEED DETERMINATION
ABAG: June 30, 2022 through December 31, 2030
Income Category Percent
Very-Low* 25.9%
Low 14.9%
Moderate 16.5%
Above-Moderate 42.6%
Housing Unit Need
114,442
65,892
72,712
188,130
Total 100.0% 441,176
* Extremely-Low 15.5% Included in Very-Low Category
Notes:
Income Distribution:
Income categories are prescribed by California Health and Safety Code
(Section 50093, et. seq.). Percents are derived based on Census/ACS
reported household income brackets and county median income, then adjusted
based on the percent of cost-burdened households in the region compared
with the percent of cost burdened households nationally.
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ATTACHMENT 2
HCD REGIONAL HOUSING NEED DETERMINATION:
ABAG June 30, 2021 through December 31, 2030
Methodology
ABAG: PROJECTION PERIOD (8.5 years)
HCD Determined Population, Households, & Housing Unit Need
Reference
No.
Step Taken to Calculate Regional Housing Need Amount
1. Population: December 31 2030 (DOF June 30 2030
projection adjusted + 6 months to December 31 2030)
8,273,975
2. -Group Quarters Population: December 31 2030 (DOF June
30 2030 projection adjusted + 6 months to December 31 2030)
-169,755
3. Household (HH) Population 8,159,280
4. Projected Households 3,023,735
5. + Vacancy Adjustment (3.27%)+98,799
6. +Overcrowding Adjustment (3.13%)+94,605
7. + Replacement Adjustment (.50%)+15,120
8. -Occupied Units (HHs) estimated June 30, 2022 -2,800,185
9. + Cost-burden Adjustment +9,102
Total 6th Cycle Regional Housing Need Assessment (RHNA) 441,176
Detailed background data for this chart is available upon request.
Explanation and Data Sources
1-4. Population, Group Quarters, Household Population, & Projected Households: Pursuant
to Gov. Code Section 65584.01, projections were extrapolated from DOF projections.
Population reflects total persons. Group Quarter Population reflects persons in a
dormitory, group home, institute, military, etc. that do not require residential housing.
Household Population reflects persons requiring residential housing. Projected
Households reflect the propensity of persons within the Household Population to form
households at different rates based on American Community Survey (ACS) trends.
5.Vacancy Adjustment: HCD applies a vacancy adjustment (standard 5% maximum to
total projected housing stock) and adjusts the percentage based on the region’s current
vacancy percentage to provide healthy market vacancies to facilitate housing
availability and resident mobility. The adjustment is the difference between standard
5% vacancy rate and regions current vacancy rate based (1.73%) on the 2014-2018
ACS data. For ABAG that difference is 3.27%.
6.Overcrowding Adjustment: In regions where overcrowding is greater than the
comparable region’s overcrowding rate, or in the absence of comparable region the
national overcrowding rate. HCD applies an adjustment based on the amount the
regions overcrowding rate (6.73%) exceeds the comparable region’s rate (3.60%). For
ABAG that difference is 3.13%. Data is from the 2014-2018 ACS.
7.Replacement Adjustment: HCD applies a replacement adjustment between .5% and
5% to the total housing stock based on the current 10-year annual average percent of
demolitions the region’s local government annual reports to Department of Finance
(DOF). For ABAG the 10-year annual average multiplied by the length of the projection
period is .40%, and the minimum .50% adjustment is applied.
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8. Occupied Units: This figure reflects DOF’s estimate of occupied units at the start of the
projection period (June 30, 2022).
9. Cost Burden Adjustment: HCD applies an adjustment to the projected need by
comparing the difference in cost-burden by income group for the region to the cost-
burden by income group for the comparable regions, as determined by ABAG. The
very-low and low income RHNA is increased by the percent difference (66.64%-
66.00%=.64%) between the region and the comparable region cost burden rate for
households earning 80% of area median income and below, then this difference is
applied to very low- and low-income RHNA proportionate to the share of the population
these groups currently represent. The moderate and above-moderate income RHNA is
increased by the percent difference (16.25%-13.10%=3.15%) between the region and
the comparable region cost burden rate for households earning above 80% Area
Median Income, then this difference is applied to moderate and above moderate
income RHNA proportionate to the share of the population these groups currently
represent. Data is from 2012-2016 CHAS.
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Association of Bay Area Governments
Executive Board
June 18, 2020 Agenda Item 10.a.
Regional Housing Needs Allocation (RHNA):
Update on Regional Housing Needs Determination (RHND)
Page 1
Subject: Update on Regional Housing Needs Determination (RHND) as
identified by the California Department of Housing and Community
Development (HCD)
Background: On June 10, 2020, ABAG received the proposed Cycle 6 RHND
from HCD staff, following a consultation process between ABAG
and HCD staff this spring. The RHND as determined by HCD
between 2022 and 2030 has been identified as 441,176 housing
units. Of the total identified need:
• 25.9% would be for very-low income households
• 14.9% would be for low income households
• 16.5% would be for moderate income households
• 42.6% would be for above-moderate income
households
Issues: Should the Board wish to object to the RHND under California
Government Code 65584.01(c), it must do so within 30 days of
receipt of the RHND (July 10, 2020). HCD has agreed to ABAG
staff’s request to use the lower Department of Finance population
forecast when calculating the RHND, as well as other technical
inputs provided during consultation. As staff has not identified any
technical inaccuracies in the RHND calculation, staff recommends
accepting the notice of determination.
Recommended Action: Information Only
Attachments: A. Staff Memo on RHND
B. HCD Memo to ABAG Board
C. Presentation
Reviewed: ______________________________
Therese W. McMillan
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State of California
GOVERNMENT CODE
Section 65584.01
65584.01. For the fourth and subsequent revision of the housing element pursuant
to Section 65588, the department, in consultation with each council of governments,
where applicable, shall determine the existing and projected need for housing for each
region in the following manner:
(a) The department’s determination shall be based upon population projections
produced by the Department of Finance and regional population forecasts used in
preparing regional transportation plans, in consultation with each council of
governments. If the total regional population forecast for the projection year, developed
by the council of governments and used for the preparation of the regional
transportation plan, is within a range of 1.5 percent of the total regional population
forecast for the projection year by the Department of Finance, then the population
forecast developed by the council of governments shall be the basis from which the
department determines the existing and projected need for housing in the region. If
the difference between the total population projected by the council of governments
and the total population projected for the region by the Department of Finance is
greater than 1.5 percent, then the department and the council of governments shall
meet to discuss variances in methodology used for population projections and seek
agreement on a population projection for the region to be used as a basis for
determining the existing and projected housing need for the region. If agreement is
not reached, then the population projection for the region shall be the population
projection for the region prepared by the Department of Finance as may be modified
by the department as a result of discussions with the council of governments.
(b) (1) At least 26 months prior to the scheduled revision pursuant to Section
65588 and prior to developing the existing and projected housing need for a region,
the department shall meet and consult with the council of governments regarding the
assumptions and methodology to be used by the department to determine the region’s
housing needs. The council of governments shall provide data assumptions from the
council’s projections, including, if available, the following data for the region:
(A) Anticipated household growth associated with projected population increases.
(B) Household size data and trends in household size.
(C) The percentage of households that are overcrowded and the overcrowding rate
for a comparable housing market. For purposes of this subparagraph:
(i) The term “overcrowded” means more than one resident per room in each room
in a dwelling.
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(ii) The term “overcrowded rate for a comparable housing market” means that the
overcrowding rate is no more than the average overcrowding rate in comparable
regions throughout the nation, as determined by the council of governments.
(D) The rate of household formation, or headship rates, based on age, gender,
ethnicity, or other established demographic measures.
(E) The vacancy rates in existing housing stock, and the vacancy rates for healthy
housing market functioning and regional mobility, as well as housing replacement
needs. For purposes of this subparagraph, the vacancy rate for a healthy rental housing
market shall be considered no less than 5 percent.
(F) Other characteristics of the composition of the projected population.
(G) The relationship between jobs and housing, including any imbalance between
jobs and housing.
(H) The percentage of households that are cost burdened and the rate of housing
cost burden for a healthy housing market. For the purposes of this subparagraph:
(i) The term “cost burdened” means the share of very low, low-, moderate-, and
above moderate-income households that are paying more than 30 percent of household
income on housing costs.
(ii) The term “rate of housing cost burden for a healthy housing market” means
that the rate of households that are cost burdened is no more than the average rate of
households that are cost burdened in comparable regions throughout the nation, as
determined by the council of governments.
(I) The loss of units during a state of emergency that was declared by the Governor
pursuant to the California Emergency Services Act (Chapter 7 (commencing with
Section 8550) of Division 1 of Title 2), during the planning period immediately
preceding the relevant revision pursuant to Section 65588 that have yet to be rebuilt
or replaced at the time of the data request.
(2) The department may accept or reject the information provided by the council
of governments or modify its own assumptions or methodology based on this
information. After consultation with the council of governments, the department shall
make determinations in writing on the assumptions for each of the factors listed in
subparagraphs (A) to (I), inclusive, of paragraph (1) and the methodology it shall use
and shall provide these determinations to the council of governments. The methodology
submitted by the department may make adjustments based on the region’s total
projected households, which includes existing households as well as projected
households.
(c) (1) After consultation with the council of governments, the department shall
make a determination of the region’s existing and projected housing need based upon
the assumptions and methodology determined pursuant to subdivision (b). The region’s
existing and projected housing need shall reflect the achievement of a feasible balance
between jobs and housing within the region using the regional employment projections
in the applicable regional transportation plan. Within 30 days following notice of the
determination from the department, the council of governments may file an objection
to the department’s determination of the region’s existing and projected housing need
with the department.
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(2) The objection shall be based on and substantiate either of the following:
(A) The department failed to base its determination on the population projection
for the region established pursuant to subdivision (a), and shall identify the population
projection which the council of governments believes should instead be used for the
determination and explain the basis for its rationale.
(B) The regional housing need determined by the department is not a reasonable
application of the methodology and assumptions determined pursuant to subdivision
(b). The objection shall include a proposed alternative determination of its regional
housing need based upon the determinations made in subdivision (b), including
analysis of why the proposed alternative would be a more reasonable application of
the methodology and assumptions determined pursuant to subdivision (b).
(3) If a council of governments files an objection pursuant to this subdivision and
includes with the objection a proposed alternative determination of its regional housing
need, it shall also include documentation of its basis for the alternative determination.
Within 45 days of receiving an objection filed pursuant to this section, the department
shall consider the objection and make a final written determination of the region’s
existing and projected housing need that includes an explanation of the information
upon which the determination was made.
(d) Statutory changes enacted after the date the department issued a final
determination pursuant to this section shall not be a basis for a revision of the final
determination.
(Amended by Stats. 2019, Ch. 497, Sec. 146. (AB 991) Effective January 1, 2020.)
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