In a landmark decision, California Renters Legal Advocacy & Education Fund v. City of San Mateo (2021) 68 Cal.App.5th 820, the First District Court of Appeal held that the City of San Mateo violated the Housing Accountability Act (HAA) in denying a proposed multi-family housing project based on the city’s concerns that the project’s height and scale conflicted with the city’s design standards. The court held that because the city’s design standards are subjective, rather than objective, those standards could not serve as a basis to deny the application under the HAA. The court also upheld the HAA against challenges that it infringed upon the city’s and neighboring property owners’ rights under the California Constitution.
Nearly 40 years ago, the Legislature passed the Housing Accountability Act (HAA), also known as the “Anti-NIMBY” law with the goal of “meaningfully and effectively curbing the capability of local governments to deny, reduce the density for, or render infeasible housing development projects.” (Gov. Code, § 65589.5, subd. (a)(2)(K).) The HAA provides that local governments may only deny an application to build housing if the proposed housing project does not comply with “objective” general plan, zoning, and design review standards. (Gov. Code, § 65589.5, subd. (j)(i).) In 2017, the Legislature added weight to this requirement by specifying that a housing development is deemed to comply with a municipality’s objective standards if “substantial evidence … would allow a reasonable person to conclude” that the project is consistent with those standards. (Gov. Code, § 65589.5, subd. (f)(4).)
In 2015, a developer applied to the City of San Mateo to build a ten-unit, multifamily residential building on a site surrounded by single-family residences. The site is designated for high-density multifamily residential in the city’s general plan and zoning code. The city’s planning staff concluded that the project was consistent with the city’s general plan and zoning code standards for multifamily dwellings and with the city’s design guidelines. Staff recommended the planning commission approve the project.
The application came before the planning commission in August, 2017. At the hearing, several city residents objected to the project, opining that it was too large for the surrounding single-family residential neighborhood. After continuing the hearing, the planning commission voted to deny the application, agreeing with neighboring residents that the building was out of scale with neighboring single-family homes. The commission directed staff to prepare findings that the project is inconsistent with the city’s design guidelines because it is not in scale and not in harmony with the character of the neighborhood and that the building is too tall and bulky for the site. More specifically, the commission observed that there is a two-story differential between the project and adjacent single-family dwellings, which is inconsistent with the requirement in the design guidelines that there be a “transition or step in height” between the buildings.
At its next meeting, the planning commission adopted the proposed findings in full and voted to deny the project. The plaintiffs, a group of housing advocates, appealed to the city council. The city council upheld the planning commission’s decision. The plaintiffs then filed a lawsuit seeking a writ of administrative mandamus on the ground that the city’s denial of the project violated the HAA.
The trial court denied the petition. The trial court held the city’s design guidelines were objective for the purposes of the HAA and that the city properly denied the application because the project was inconsistent with the guidelines. The court also denied the petition on the ground that the HAA conflicted with the California Constitution. In particular, the court held that to the extent the HAA conflicted with otherwise enforceable provisions of the city’s municipal code regarding housing development, the HAA is unenforceable as an intrusion into the city’s municipal affairs under the “home rule” doctrine of the California Constitution. (Cal. Const. Art. IX, § 5(a).) In addition, the trial court found that the HAA violates the prohibition on delegation of municipal affairs to private parties (Cal. Const. Art. XI, § 11(a)). The plaintiffs appealed.
The Court of Appeal’s Decision
Application of the HAA to the City of San Mateo’s Design Standards
The appellate court first considered whether the city properly denied the application for the multifamily housing project under the HAA. The court explained that the key question in its application of the HAA is whether the city’s design guidelines qualify as “applicable, objective general plan, zoning, and subdivision standards and criteria, including design review standards, which would allow the city to disapprove the project under Government Code section 65589.5, subdivision (j)(1), if they are not satisfied. The court concluded that the portions of the design guidelines addressing height are not objective for the purposes of the HAA.
The court explained that the question of whether the design standards are “objective” within the meaning of the HAA is a question of law to which the court owes the city no deference. The court determined that the language in the city’s design guidelines requires subjective judgment, and is therefore not objective. For example, the design guidelines provide that if building height varies by more than one story, the city may require a “transition or a step in height.” The fact that the guidelines allow a choice in how to address the height differential shows that the standard is not entirely objective. Moreover, the terms “transition” and “step in height” are open to interpretation. For instance, some might view the placement of large trees in between buildings, or the addition of trellises, as providing a transition or a step in height. Indeed, under the city planning staff’s original interpretation of the design guidelines, the question was treated as one of design choice which could be resolved in a variety of ways, depending on which form the designer viewed as most “compatible” with adjacent buildings. Furthermore, even assuming the guidelines require a setback in height, the guidelines do not state how large the setback must be, leaving that determination open to subjective determination. Based on these and similar considerations, the court held that the city’s design standards are subjective, rather than objective, so those standards cannot be a basis to deny a housing project under the HAA.
California Constitutional Challenges
The court next considered whether the HAA violates the California Constitution—specifically, whether subdivision (f)(4) of the HAA violates the “home rule” doctrine for charter cities, and the prohibition on delegation of municipal functions, and whether the HAA denies neighboring property owners of procedural due process rights. The court concluded that the HAA does not violated the California Constitution on any of these grounds.
The “Home Rule”
The California Constitution’s “home rule” provides that charter cities may govern themselves without legislative intrusion into municipal affairs. (See Cal. Const., Art. XI, § 5.) The courts apply a four-part test to determine whether the Legislature may exert control over a charter city’s action, despite its right to home rule: (1) whether the ordinance at issues regulates a “municipal affair”; (2) whether the case presents an actual conflict between local and state law; (3) whether the state law addresses a matter of statewide concern; and (4) whether the state law is “reasonably related” to resolving the concern at issue and is “narrowly tailored” to avoid unnecessary interference with local governance. Under this test, if the court determines that the subject of the state statute is of statewide concern and that the statute is reasonably related to its resolution and not unduly broad, then the conflicting charter measure is deemed not to be a “municipal affair” and the Legislature may pass legislation addressing it.
Applying these factors to the HAA and the city’s design review ordinance, the court held that the first two prongs were met because planning and zoning laws are a traditional municipal affair and, to the extent the city’s ordinances allow the city to reject applications for housing developments based on subjective standards, the ordinances conflict with the HAA. As to the third prong, the parties agreed that the provision of housing is a matter of statewide concern. The city argued, however, that subdivision (f)(4) of the HAA does not itself address a matter of statewide concern because local governments’ denial of housing projects is not the sole cause of the housing crisis. Other factors, such as high construction costs, a shortage of construction labor, and delays caused by the need to comply with CEQA, also contribute to the shortage. The court rejected this argument, explaining that the fact that local government’s denials of housing permits are not the only cause of the state’s housing crisis is immaterial. The question is whether the problem the Legislature is trying to solve is a statewide problem, not whether the solution is the only possible solution.
As to the fourth and final prong – whether the statute is reasonably related to the resolution of the identified statewide concern and is narrowly tailored to avoid unnecessary interference with local government – the court found that the Legislature’s limiting the ability of local governments to deny new development based on subjective criteria is reasonably related to providing additional housing. Furthermore, the statute is narrowly tailored in that it leaves local governments free to establish and enforce policies and development standards, as long as those standards are objective, and do not otherwise interfere with the jurisdiction’s ability to meet its share of regional housing needs. Additionally, the HAA does not bar local governments from imposing conditions on projects to meet subjective standards; the HAA only prohibits local governments from reducing a project’s density or denying the project altogether based on subjective standards. The HAA also allows local governments to deny a proposed housing project if the project would have an unavoidable adverse impact on health and safety. (See Gov. Code, § 65589.5, subd. (j)(1)(A) and (B).) Accordingly, the statute is not only reasonably related to a statewide concern, but also narrowly tailored to avoid undue interference with local control over zoning and design decisions. Therefore, section (f)(4) of the HAA does not violate California Constitution’s “home rule.”
Delegation of Municipal Functions
The court next considered whether subdivision (f)(4) of the HAA violates the California Constitution’s prohibition on “delegate[ing] a private person or body power to … perform municipal functions.” (Cal. Const. Art. XI, § 11, subd. (a).) The court held that it does not. Although subdivision (f)(4) of the HAA lowers the burden to show a project is consistent with objective standards, the statute does not cede municipal authority to private persons. For example, local agencies maintain the authority and discretion to determine whether the record contains substantial evidence that a reasonable person would find the project is consistent with applicable objective standards, and to impose conditions of approval on the project, provided that they do not reduce the project’s density where applicable objectives are met.
The city argued that subdivision (f)(4) of the HAA would allow anyone, even the project proponent, to place in the record evidence that a project is consistent with objective standards and thereby force a local agency to approve the project. The court rejected this argument, however, because the “substantial evidence” standard provides a sufficient degree of scrutiny such that not just any self-serving evidence will support the conclusion that a project is consistent with applicable objective standards. Furthermore, subdivision (f)(4) requires that the evidence to allow a reasonable person to consider the project in conformity with the objective standards. Therefore, the statute does not require a local agency to approve a project based on the unsupported opinion of a single person, or upon evidence that a reasonable person would not find credible.
Lastly, the city argued that subdivision (f)(4) of the HAA violates the rights of neighboring landowners by depriving them of the opportunity to be heard before a housing project is approved. More specifically, the city argued, subdivision (f)(4) renders local government review a useless exercise because if anyone submits evidence that the project is consistent with applicable objective standards, the project is deemed consistent and must be approved.
The court rejected this argument. Even assuming that due process protections apply to a municipality’s determination that a project is consistent with objective standards under subdivision (f)(4), there is no due process violation. The substantial evidence standard requires evidence that is of “ponderable legal significance” and is reasonable, credible, and of solid value. Nothing in the HAA prevents neighbors from presenting evidence to the agency that the substantial evidence standard is not met. Furthermore, neighbors can also present evidence that the agency should impose conditions on the project to minimize adverse effects or even deny the project if it would have an unavoidable “specific, adverse impact upon the public health or safety.” (Gov. Code, § 65589.5, subd. (j).) Therefore, although subdivision (f)(4) may affect which arguments carry the day, it does not deprive opposing neighbors with a meaningful opportunity to be heard.
The Court of Appeal in this case strictly interpreted what is meant my “objective” in the meaning of the HAA. The case makes clear that if there is room for personal judgment in deciding whether a proposed project complies with a given design standard, the standard is “subjective” and cannot be a basis to deny the housing project. The case serves as a warning to local agencies to heed the HAA’s limits on the ability to deny a proposed housing project. In the words of the court: “As the Legislature has steadily strengthened the statute’s requirements, it has made increasingly clear that those mandates are to be taken seriously. …The HAA is today strong medicine precisely because the Legislature has diagnosed a sick patient.”