(a) The Legislature finds and declares all of the following:

1. (1) The state faces a serious housing crisis, due in part to decades of underproduction of housing of all types, to serve all income levels. A key factor in addressing this crisis is to significantly increase housing production in all cities and counties across the state.
2. (2) The general plan of the County of Napa has designated significant amounts of land in the county as agricultural resources and agricultural watershed or open-space. A voter-approved initiative prohibits the redesignation of land designated as an agricultural resource or agricultural watershed or open-space without voter approval unless certain narrow exemptions apply. Due to the lack of urban services, including the provision of water and wastewater services, and infrastructure, the County of Napa has generally been concentrated in or around incorporated areas rather than in remote or rural locations in order to ensure adequate service connections.
3. (3) The Napa Pipe project, which has been in the planning phase for nearly a decade, was initially located on unincorporated land in the county, but the City of Napa is annexing the property in phases as development moves forward.
4. (4) The developer has requested an amendment to the Napa Pipe project approvals to prioritize housing in the first phase of the project. Because the first phase has already been approved by the City of Napa, these housing units cannot, under existing law, be counted toward the County of Napa’s regional housing need allocation or reported on the county’s annual progress report.
5. (5) Therefore, a unique circumstance exists wherein the County of Napa entitled the Napa Pipe project on unincorporated land, a portion of which was later annexed to the City of Napa. Since the county approved the project, the project’s intent has been for the county to help fund the construction of affordable units in the project while counting any constructed affordable and moderate-income housing units toward the county’s regional housing need allocation before the annexation. Because the project now envisions developing housing units on portions of the project site that have already been annexed by the city, the project cannot be realized as originally planned and approved under existing law.
6. (6) The Legislature recognizes the importance of the Napa Pipe project, under which at least 700 units of housing will be constructed and up to 945 units with a density bonus.
7. (7) Therefore, the Legislature finds a unique circumstance exists under which the County of Napa may be allowed to count housing units built on land within the jurisdiction of the City of Napa toward the county’s housing production targets on the county’s annual progress report.
8. (8) The Legislature finds that this unique circumstance is not intended to set a precedent or encourage or justify future similar actions by a county or city.

(b) The County of Napa and the City of Napa may reach a mutually acceptable agreement to allow one of those jurisdictions to report on its annual housing production report to the department, pursuant to subparagraph (H) of paragraph (2) of subdivision (a) of Section 65400, those completed entitlements, building permits, and certificates of occupancy issued by the other jurisdiction for the development of housing if all of the following conditions are met:

1. (1) Both jurisdictions have adopted a housing element that, pursuant to Section 65585, the department has found to be in substantial compliance with this article.
2. (2) Within the 12 months preceding the effective date of the agreement, both jurisdictions have submitted to the department the annual report required by paragraph (2) of subdivision (a) of Section 65400.
3. (3) The completed entitlements, building permits, and certificates of occupancy that are to be reported by one of the jurisdictions will not also be reported on the housing production report of the other jurisdiction.

4. (4) One of the following conditions applies with respect to a housing development that will be reported by a jurisdiction under an agreement pursuant to this section:

   1. (A) The housing development is proposed to be located in an area subject to the housing element of the County of Napa at the time of the final allocation of regional housing need under Section 65584.03, 65584.04, or 65584.06, as applicable, that is subsequently annexed by the City of Napa, provided that all of the following conditions are met:

      1. (i) The City of Napa annexed the territory after the final allocation of regional housing need.
      2. (ii) The council of governments, the subregional entity, or the department, as applicable, provides written confirmation that the methodology used to allocate the share of the regional housing need did not account for the annexation.
      3. (iii) There was no transfer of units from the site of the housing development pursuant to subdivision (d) of Section 65584.07 of a portion of the County of Napa’s allocation of regional housing need to the City of Napa.
   2. (B) The housing development is located on land owned by one of the jurisdictions that is located within the jurisdictional boundaries of the other jurisdiction.
   3. (C) The housing development is located within the jurisdictional boundaries of one jurisdiction and receives funding from the other jurisdiction.

5. (5) Before approval of the agreement, the Board of Supervisors of the County of Napa and the City Council of the City of Napa each hold a public hearing to solicit public comment on the proposed agreement. The County of Napa and the City of Napa shall each make available copies of the proposed agreement in advance of the hearing that contain the following information:

   1. (A) Information to show that the proposed agreement complies with the requirements of this section.
   2. (B) Identification of the site of each proposed housing development.
   3. (C) The total number of units to be constructed in each income category.
   4. (D) The total number of units that will be shown in the annual housing production report of each jurisdiction.

6. (6) Following the hearing required by paragraph (5), the board of supervisors of the County of Napa and the City Council of the City of Napa each approve the proposed agreement. The Board of Supervisors of the County of Napa and the city council of the City of Napa shall not approve the proposed agreement unless they make written findings, based on substantial evidence, as to all of the following:

   1. (A) The proposed agreement complies with the requirements of this section.
   2. (B) The agreement will not cause or exacerbate racial, ethnic, or economic segregation.
   3. (C) The housing developments that are to be reported by a jurisdiction under the agreement do not include any housing development that is located in a census tract where more than 50 percent of the population are very low income households, as defined in Section 50105 of the Health and Safety Code, unless the housing development is within one-half mile of a major transit stop or a high-quality transit corridor, as those terms are defined in Section 21155 of the Public Resources Code.
   4. (D) The housing developments that are to be reported by a jurisdiction under the agreement do not include any housing development the completion of which would result in a reduction in the number of housing units, or a reduction in the affordability of housing units, on the site where the housing development is proposed to be built.