HCD to Pasadena: The Development Cap Violates the Housing Crisis Act

You've got a project in a specific-plan area, and the zoning pencils out. Then someone at the counter tells you the plan area has a cap — a fixed number of homes that can ever be approved there — and the number is spoken for. Your units don't fit under the ceiling, so they wait. Or they die.

If you build, own, or plan in California, that ceiling shows up more than it should: a hard number on how many approvals a place will hand out.

Here's the thing: HCD's position is that a city can't do that. Rationing housing approvals is exactly what the Housing Crisis Act was written to stop — and in Pasadena, HCD said so in writing.

What Pasadena's Development Cap did

Pasadena ran a Development Cap Program that, in HCD's words, "imposes an absolute limit on the number of housing units that can be approved in each of the eight specific plan areas." Not a design guideline, not a phasing schedule — an absolute ceiling on approvals, area by area.

On April 22, 2022, HCD sent the City a Letter of Technical Assistance on the Housing Crisis Act of 2019 (Government Code § 66300). Part 2 of that letter took up the Development Cap.

The statute HCD leaned on is short and blunt. Section 66300 prevents a local agency from establishing or implementing a policy that does any of the following:

(i) Limits the number of land use approvals or permits necessary for the approval and construction of housing that will be issued or allocated within all or a portion of the affected county or affected city, as applicable.

(ii) Acts as a cap on the number of housing units that can be approved or constructed either annually or for some other time period.

(iii) Limits the population of the affected county or affected city, as applicable.

That's Gov. Code § 66300, subd. (b)(1)(D). In plain terms: you can't cap the number of approvals, and you can't cap the number of units — annually or over any other window.

What HCD found

HCD's read of the program was direct:

"The City's Development Cap program, which imposes an absolute limit on the number of housing units that can be approved in each of the eight specific plan areas, violates the HCA. Specifically, it violates clause (i) above because it limits the number of land use approvals necessary for the construction of housing within a portion of an affected city."

Verified against: City of Pasadena — HCD Letter of Technical Assistance on the Housing Crisis Act (Gov. Code § 66300), dated April 22, 2022.

So HCD asked for the obvious remedy: HCD "requests that the City immediately cease implementation of the Development Cap program and adopt a resolution voiding the program at the earliest possible City Council meeting." The City had already signaled it would — HCD noted that in an email dated April 1, 2022, "the City informed HCD of its intent to invalidate the Development Cap Program."

Even with the City moving to fix it, HCD kept the finding in the letter "to formally memorialize HCD's position on the City's program."

Why the shape of the cap didn't save it

Notice what HCD did not hinge on. It didn't matter that the cap applied to specific plan areas rather than the whole city — the statute reaches approvals within "all or a portion" of a city. And it didn't matter that the number was an absolute ceiling rather than an annual quota — clause (ii) covers a cap "annually or for some other time period."

That's the portable lesson, and it travels past Pasadena. If a jurisdiction rations housing approvals — an annual permit cap, a growth-allocation lottery, a per-area unit bank that runs dry — HCD's position is that the Housing Crisis Act does not allow it. The friction is a barrier worth questioning, not a rule to accept at face value.

One caveat that matters

Be precise about what this is. A Letter of Technical Assistance is HCD's interpretation of state law — not a court ruling, and not automatically "the law." It signals where the state believes a city is offside; courts remain the final word on whether a particular cap is invalid. HCD also reminded Pasadena that if a city's actions don't comply, it "may notify the California Office of the Attorney General that the local government is in violation of state law."

None of this is legal advice. If a development cap or approval quota is standing between you and a permit, confirm how your own jurisdiction applies it, and run it past your building department or land-use counsel before you rely on any of it.

What CrossBeam does with it

When the letter lands on your desk, CrossBeam turns it around the same day: what each item is actually asking, the code or law behind it, and a written response you can hand to your team or your attorney — the back-and-forth that used to eat weeks, done in a couple of hours.