First District Court of Appeal Rejects Challenges to Senior Housing Project under the Density Bonus Law and CEQA

On March 11, 2011, in Wollmer v. City of Berkeley (2011) 193 Cal.App.4th 1329, the California First District Court of Appeal rejected a challenge brought under the Density Bonus Law and CEQA to the City of Berkeley’s approval of an infill senior housing project. The case clarifies that courts must look to the amount of rent paid, rather than the amount of rent received by the developer, in determining whether a project classifies as affordable housing. The case also emphasizes local government’s authority to grant concessions and waivers under the Density Bonus Law (Gov. Code, § 65915 et seq). Further, the case provides important direction concerning CEQA’s infill exemption as it intersects with the Density Bonus Law and CEQA’s categorical exemption for in-fill development.

Background. The City of Berkeley approved a five-story mixed-use development project that would include 148 units over ground floor retailers and would be eligible to receive Section 8 funding. In approving the project, the City granted various zoning variances from the City’s building height limits, floor- area ratio limits and yard setback requirements. The project included a “mandatory” density bonus award of 32 residential units and an additional discretionary award of 25 residential units under Government Code section 65915 and Berkeley Municipal Code section 23C.12.050. The City determined the project was exempt from environmental review under CEQA as an infill development pursuant to CEQA Guidelines section 15332. Petitioner, Steven Wollmer, filed suit, alleging, among other things, that the City violated the Density Bonus Law in granting variances and calculating the project’s density bonus and that the City violated CEQA in determining that the Project qualified for CEQA’s infill development exemption. The superior court upheld the City’s actions and Wollmer appealed.

The Density Bonus Law. Wollmer first argued the City could not grant a density bonus to the project because the developer would obtain Section 8 rents, and therefore, the developer would receive more money than qualifies as affordable rent under the Density Bonus Law. The Court of Appeal disagreed, finding that the term “affordable rent” within the meaning of the Density Bonus Law is concerned with the rent a tenant pays, not with the compensation received by the housing provider. Therefore, according to the court, for the purposes of the Density Bonus Law, it mattered not whether the project would receive Section 8 funding.

Wollmer next argued the City erred in applying the allowable density under the City’s zoning ordinance, rather than the density standards set forth in the City’s General Plan. The court explained that it is true that under the Density Bonus Law, where a conflict exists between densities permitted under a local government’s zoning code and its general plan, the densities specified in the general plan shall govern. In this case, however, the court found no conflict between the City’s zoning code and General Plan’s land use classifications because the General Plan did not specify densities for specific parcels. Rather, the City’s General Plan’s standards are applied to larger areas surrounding a proposed project, and zoning standards are applied to specific parcels. Thus, according to the court, the project is consistent with both the General Plan’s density standards and the City’s zoning code standards.

Wollmer furthered argued the City violated the Density Bonus Law by waiving standards for height, number of stories, and setbacks to accommodate certain project “amenities,” such as an interior courtyard, a community plaza, and high ceilings in the commercial and residential areas. The City had waived the standards under Government Code section 65915, subdivision (e)(1), which states: “in no case may a city apply any development standards that will have the effect of physically precluding construction of a development meeting the [density bonus] requirements.” According to Wollmer, a local government’s standards may only be waived to accommodate the affordable housing portion of a project, and not to accommodate project amenities. The Court of Appeal disagreed, holding nothing in the statute requires a developer to strip a project of amenities that would require a waiver of development standards. Rather, development standards may be waived where the standards physically preclude construction of a proposed housing development meeting the requirement for a density bonus, regardless of whether that project includes amenities.

CEQA. Next, the Court of Appeal considered whether the City violated CEQA in determining that the project was exempt from environmental review pursuant to CEQA Guidelines section 15332. That section provides a categorical exemption from CEQA for projects meeting the definition of “in-fill development” that do not trigger any of the exceptions to the exemption under CEQA Guidelines section 15300.2.

The court first rejected Wollmer’s claim that the City’s waiver of City zoning standards, as mandated by the Density Bonus Law, precluded the project from qualifying for CEQA’s infill exemption. According to the court, the requirements of CEQA Guidelines section 15332, subdivision (a), which requires that projects qualifying for the exemption must comply with all applicable general plan and zoning designations, were met. The court reasoned that although the City had waived its height and setback standards, the Density Bonus Law required the City to do so, and therefore, taking the laws together, the waived zoning standards were not “applicable” within the meaning of CEQA’s in-fill exemption.

The court next considered whether either the project’s location at the intersection of two major thoroughfares or the traffic model used to study the project’s traffic impacts, constituted “unusual circumstances” – an exception to the CEQA exemption. According to the court, Wollmer had offered no substantial evidence that the project’s traffic conditions or the city’s traffic model constituted unusual circumstances. Rather, Wollmer’s objections were his own personal, lay opinion, and did not refute the City’s traffic experts. Further, locating an infill project at the intersection of two major city streets is well within the range of characteristics one would expect for an infill project, and it is indeed the type of project the law encourages.

Lastly, Wollmer argued the project should not qualify for the infill exemption because the project included traffic improvements that, according to Wollmer, mitigated the project’s traffic impacts. The court rejected this claim. In doing so, the court distinguished Salmon Protection & Watershed Network v. County of Marin (2004) 125 Cal.App.4th 1098, in which the Court of Appeal held that a project within a riparian area deemed of critical concern did not qualify for a categorical exemption where the respondent county relied on proposed mitigation measures to find no reasonable possibility of a significant impact. In contrast to Salmon Protection, in this case, the traffic improvements would help solve existing traffic problems and future traffic problems, generally. The proposed improvements were not mitigation measures for the senior housing development at issue in the case, and therefore the City properly applied CEQA’s in-fill development exception.