Regional Housing Needs Allocation

Since 1969, California has required that all local governments (cities and counties) adequately plan to meet the housing needs of everyone in the community. California’s local governments meet this requirement by adopting housing plans as part of their “general plan” (also required by the state). General plans serve as the local government’s "blueprint" for how the city and/or county will grow and develop and include seven elements: land use, transportation, conservation, noise, open space, safety, and housing. In order to create a housing plan (aka housing element) showing it could meet the local housing needs, a jurisdiction must first know how much housing it must plan for (and estimate how much will be needed at a variety of affordability levels in order to match the needs of the people who will live there). This is determined by a process called the regional housing needs assessment.

Assessment: Calculating the Housing Need in Each Region

HCD is responsible for determining the regional housing needs assessment (segmented by income levels) for each region’s planning body known as a “council of governments” (COG). HCD starts with demographic population information from the California Department of Finance and uses a formula to calculate a figure for each region/COG.

Each COG uses its own demographic figures to calculate what it believes the regional housing need is. Each COG then coordinates with HCD — taking into account factors not captured in the calculations — to arrive at a final figure.  This final figure is the regional housing needs assessment.

Allocation: Divvying up the need amongst cities and counties

Once HCD and the COG have agreed to the region’s assessment figure (the amount of housing that must be planned for), the COG takes over and is responsible for divvying up (allocating) the housing need amongst all of the jurisdictions (cities/counties) within that region. The COG does this in a Regional Housing Need Allocation Plan (RHNA Plan). Learn more in Building Blocks: A Comprehensive Housing-Element Guide.

Regional Housing Needs

Topics Covered

Allocations for 6th Cycle Housing Elements: The amount of housing each local jurisdiction within a region must plan to accommodate

Other regions not covered above (6th Cycle)

Allocations for 5th Cycle Housing Elements: The amount of housing each local jurisdiction within a region must plan to accommodate

Other regions not covered above (5th Cycle): 2014-2019

Data Packages

HCD, in collaboration with California’s various Councils of Governments (COGs), developed pre-approved, data packages for the 5th and 6th cycle Housing Element updates. Because the data has been pre-approved (for COGs to use in preparing their Housing Element updates), it is not subject to further review by HCD.

6th Cycle Data Package for Each Council of Governments

6th Cycle Data Package for Each Non–Council-of-Governments Counties

HCD RHNA Audit Action Plan

HCD values the findings of the California State Auditor’s report on the Regional Housing Needs Assessment (RHNA) process, which found HCD’s needs assessment methodology to be sound. The auditor also identified opportunities for HCD to further promote fairness, accuracy, and transparency in the RHNA. HCD is committed to addressing the auditor’s findings in a timely and comprehensive manner. Actions HCD will undertake include the following:

  • Improve review documentation and create procedures to further ensure data errors are eliminated.
  • Conduct research and public outreach to determine an equitable, fair, and transparent jobs/housing adjustment factor.
  • Ensure data on units lost during state of emergency is provided, verified, and applied in each determination.
  • Conduct research and public outreach to perform a formal analysis of healthy vacancy rates and historical trends to inform adjustments using the vacancy rate factor.
  • Ensure HCD’s RHNA determination letters describe, in detail, all factors required by GC 65584.01.

HCD will act quickly to implement the auditor’s recommendations. Each recommendation made by the auditor will have a variety of tasks associated with it, summarized below.

Recommendation 1 (QA/QC Data Review): To ensure that its needs assessments are accurate and do not contain unnecessary errors, by June 2022 HCD should institute a process to ensure its staff perform multiple reviews of data included in its assessments, including data that staff input and councils of governments submit.

  • Create checklist which documents the data submitted by the COG, prompts staff to confirm the accuracy of the data submitted, and documents how factors were considered.
  • Include data verification and confirmation checks in the RHNA data workbook.
  • Ensure multiple levels of review, from staff to management, of data inputs and review checklist to ensure completion of checklist and review materials.
  • Consider implementing new data gathering methods, such as utilizing application programming interfaces (API’s) which can reduce errors caused by copy/paste or other manual collection methods.

Recommendation 2 (Jobs Housing Factor and Units Lost): To demonstrate that its needs assessments are complete and address all relevant factors, by September 2022 HCD should establish a formal process to document its consideration of all factors required by state law in its needs assessments.

  • HCD will convene a public process to discuss and identify jobs-housing balance data sources, methodology, and recommended targets. This process shall include a panel of experts with relevant expertise in the field of jobs-housing imbalance, planning, and/or best practices, all as determined, identified, and selected by HCD.
  • To the extent HCD adopts a jobs-housing balance methodology and recommended targets, HCD will apply such targets or methodology to future determinations. HCD shall use reasonable and good faith efforts to ensure that any methodologies deployed are transparent and uniformly applied.
  • If and to the extent necessary and appropriate data is available and reliable, as determined by HCD, HCD will make written determinations on whether each region has a current and/or projected imbalance between jobs and housing.
  • If not provided, HCD will request employment projections from the COG to consider using in any jobs/housing adjustment factor.
  • If not provided, HCD will request that data from the COG related to units lost during a state of emergency be submitted to HCD. HCD will work with Department of Finance and other agencies to verify data submitted by the COG contains a complete accounting of all units lost during the state of emergency and will incorporate the adjustment factor into all determinations in a transparent and equitable manner.
  • To the extent HCD adopts a jobs-housing balance data source, methodology, and recommended targets, HCD will formally incorporate such jobs/housing methodology and recommended targets, along with explanatory notes regarding the same into the Regional Housing Need Determination letter template to be transmitted to the regional councils of government.

Recommendation 3 (Vacancy Rate): To ensure that it adequately supports the vacancy rate adjustments it makes to needs assessments, by February 2023 HCD should perform a formal analysis of healthy vacancy rates and historical trends to inform those adjustments.

  • HCD will conduct research into the academic or industry studies published regarding historical and current vacancy rates, and how they may be used to calculate an accurate vacancy rate to use for the RHNA. If such research is out-of-date or not available, HCD may consider commissioning a study on the topic.
  • HCD will consult with a panel of experts regarding the academic or industry studies available and determine how to best use the relevant information available to form a target adjustment factor to use in the RHNA.
  • HCD will consider both owner and renter vacancy rates going forward and may apply different targets for each based on the conclusions from the research and panel recommendations.

Recommendation 4 (Comparable Region Analysis): To ensure that it does not reduce its needs assessments based on inappropriate information provided by councils of governments, by June 2022 HCD should develop a formal process to review the appropriateness of councils of governments' proposed comparable regions, including identifying the criteria it will consider when reviewing councils of governments proposals. HCD should use this formal process and criteria to consistently evaluate the appropriateness of the proposals to ensure that they identify regions with healthy housing markets.

  • HCD will establish a formal set of criteria and factors that COGs may include in their comparable region analysis.
  • In considering acceptable factors, HCD will exclude factors that are either identical to or highly correlated with overcrowding and housing cost burden.
  • In establishing formal criteria and factors for comparable region analysis, HCD may consult with a panel of experts to get input on what factors are acceptable as measures of comparability but are not correlated with high rates of overcrowding or cost burden.