The Manhattan Beach City Council decided Wednesday night not to submit a state-mandated housing plan before a deadline this week, potentially exposing the city to legal and financial risks.

Manhattan Beach had been required to submit a revised plan by February 12 that would show how it would gradually increase housing density by 774 units. A prior outline submitted by the city was rejected by the state in October 2021, with a range of revisions required.

The plan, part of what is known as the 6th Cycle of the Regional Housing Needs Assessment (RHNA), has come under fire from councilmembers and many community members as being unrealistic within an already densely populated city.

Councilmembers agreed on a 5-0 vote to let the deadline pass, and to continue discussing the plan in a closed session, as early as next Tuesday.

City staff had prepared an outline of a plan that City Council could pass and be in compliance, and warned councilmembers that noncompliance with the state-mandated deadline could be risky for the city.

In addition to facing steep financial penalties of up to $10,000-$100,000 per month, a city could be exposed to litigation from housing rights organizations, developers and the California Department of Housing and Community Development, staff reported.

Additionally, a city could be stripped of its authority to issue any building permits, including for remodeling projects, or to grant zoning changes, with the city's "general plan" deemed invalid.

But councilmembers bristled at the requirements of the plan, calling it unrealistic and an example of state government overreach.

They also heard information about cities that had attempted to defy the mandates, as well as a proposed statewide ballot initiative aimed at reclaiming local control over zoning laws, championed by Redondo Beach Mayor Bill Brand, who spoke at the special meeting Wednesday night.

"The more cities that are out of whack with this thing, the more it shows that this is a backward process," said Mayor Pro Tem Steve Napolitano.

"I would rather take the state on," added Napolitano. "I’m not saying we don't need to make changes, but we need to do it purposely, deliberately, with intention and meaning... We have not been given a reasonable amount of time to address at this level as a council, and as a community."

Yet Manhattan Beach Mayor Hildy Stern urged other councilmembers to adopt the plan to avoid taking on potentially costly liability for the city, and to continue to advocate for local zoning rights.

"We are all on the same page with how we do not want to see Sacramento taking away our local control. I would really like to see us stand together in front of the community on that," said Stern. "But I would also like to see us stand together in not exposing us [to liability and financial penalties] when we don’t have to."

Stern said that she thought the solution would be for the city to approve the plan and avoid liability and penalties, and then throw its weight behind the Brand initiative.

The nature of the mandate that Manhattan Beach is struggling with now goes back more than 50 years, and filters from state to regional agencies before local targets are set. 

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 (a.k.a. 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.

The California Department of Housing and Community Development 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.

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 the housing need amongst all of the jurisdictions within that region. The COG does this in a Regional Housing Need Allocation Plan (RHNA Plan).

The 6th Cycle RHNA (2021-2029) calls for Manhattan Beach to create 487 new lower-income units, 155 moderate-income units, and 132 above-moderate-income units, for a total of 774 more units.

That number is up dramatically from the 5th Cycle, which called for Manhattan Beach to create only 38 additional units.