Report 2021-125 Recommendation 4 Responses

Report 2021-125: Regional Housing Needs Assessments: The Department of Housing and Community Development Must Improve Its Processes to Ensure That Communities Can Adequately Plan for Housing (Release Date: March 2022)

Recommendation #4 To: Housing and Community Development, Department of

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.

Annual Follow-Up Agency Response From June 2024

After completing the research and stakeholder processes, HCD has determined appropriate vacancy rate adjustments to use for rental and ownership housing markets in the next RHNA cycle. The report can be located at https://www.hcd.ca.gov/sites/default/files/docs/planning-and-community/rhna/cahf-2040-rhna-report-2024.pdf

Completion Date: April 2024

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

1-Year Agency Response

HCD has reviewed the academic literature on healthy vacancy rates as well as historical vacancy rates across California and the United States. HCD found two studies, one by the Lincoln Institute of Land Policy (2018) and one by Professor Barry Bluestone, Director of the Dukakis Center for Urban and Regional Policy at Northeastern University (2022). Both studies found strong evidence that healthy vacancy rates are between 6-8% for rental housing and 1.3-2% for owner housing. Using a regression analysis, Professor Barry Bluestone found that these healthy ranges represent the point at which housing costs begin to stabilize and may even decline. Over the next year, HCD is also planning to convene a public process to get additional feedback from experts on a revised vacancy adjustment.

Completion Date: February 2023
Response Date: March 2023

California State Auditor's Assessment of 1-Year Status: Pending

Because the Department of Housing and Community Development has not yet completed its analysis and public process, it has not yet fully implemented this recommendation.

Auditee did not substantiate its claim of full implementation

6-Month Agency Response

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 If such research is out-of-date or not available, HCD may consider commissioning a study on the topic.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.

Estimated Completion Date: 02/28/2023
Response Date: September 2022

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

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.

Estimated Completion Date: 02/28/2023
Response Date: May 2022

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2021-125

Agency responses received are posted verbatim.