In United Neighborhoods for Los Angeles v. City of Los Angeles (2023) 93 Cal.App.5th 1074, the court held that the City of Los Angeles failed to consider the project’s consistency with the general plan’s applicable housing element polices, and that the challenging petitioner group sufficiently exhausted its administrative remedies regarding the inconsistencies by contesting the project’s consistency with the housing element’s general goals, without referencing the specific policies.

 Background

The City approved a project that would replace 40 apartment units subject to the City’s rent stabilization ordinance with a 156-room hotel, and determined the project was exempt from CEQA pursuant to the Class 32 in-fill exemption. United Neighborhoods for Los Angeles sought a writ of mandate arguing that the in-fill exemption does not apply because the project is not consistent with a general plan policy regarding the preservation of affordable housing. The trial court granted the writ, halting the project pending CEQA review or the City making a finding that the project is consistent with the policy at issue. The City appealed.

Court of Appeal’s Opinion

Exhaustion

The court concluded that United Neighborhoods exhausted its administrative remedies because its comments that the project’s demolition of the rent stabilized apartment units would conflict with the first goal of the housing element were sufficient to apprise the City of the issues raised in litigation. The court explained that United Neighborhoods’s references to the housing element’s general goals, rather than its specific policies, was immaterial because a general plan is structured in such a way that a project that is inconsistent with housing element goals will also conflict with the housing element policies. Moreover, the court found United Neighborhoods’s objection concerned multiple housing element policies relating to the preservation of, as opposed to the production of, affordable housing, and was therefore sufficient to apprise the City of the policies that United Neighborhoods’s objection implicated. Finally, the court emphasized that the City expressly acknowledged that United Neighborhoods’s objection was that the project’s removal of the apartment units would conflict with the housing element.

Consistency with General Plan Policies

The court held that substantial evidence does not support the City’s determination that the housing element policies are inapplicable, and that the City did not consider the project’s consistency with the applicable policies.

First, the court explained that the housing element policies are applicable to the project because the project will have an impact on the preservation of housing reflected in several of the housing element’s goals, objectives, and policies. The court found that the City focused only on the portions of the housing element that related to the production of new housing.

The court also rejected the City’s argument that “affordable housing” is a term of art that does not include rent stabilized housing units. The court explained that nothing in the housing element suggests that “affordable housing” is a term that deviates from its ordinary meaning, and therefore must refer to the dictionary definition: “housing that can be afforded by those on low or median incomes; spec. housing made available to those on lower incomes at a price below normal market value, as the result of legislation or subsidy by a local authority or the state.” Accordingly, the court determined that rent stabilized units are a form of “affordable housing” because they prohibit landlords from raising rents to reflect normal market value under certain circumstances. While the court acknowledged that deference is typically given to an agency’s finding of consistency with its own general plan, such deference is not given with respect to the City’s determination of which policies apply to the project.

Second, the court rejected the City’s argument that its consideration of the project’s consistency with the housing element can be inferred from its express discussion of other related policies. The court explained that the other policies that the City expressly discussed did not mention affordable housing and were less specific than the housing element policies.

The court was also not persuaded that the City’s conditional approval of the project on compliance with the Ellis Act—a requirement in the housing element—implied that it considered applicable housing element policies. It explained that the conditions of approval indicated that the Ellis Act condition is derived from the City’s Municipal Code, and therefore does not demonstrate the City’s consideration of the housing element policies.

While the court emphasized that the City was not required to make formal findings that housing element policies are outweighed by competing polices favoring the project, or that such a decision would necessarily conflict with the general plan, it concluded that a court cannot defer to the City’s weighing and balancing of general plan policies without supporting evidence that the City did weigh and balance all applicable policies.

Therefore, because the Class 32 in-fill exemption requires consistency with all applicable general plan policies, the court upheld the trial court’s determination that the City’s application of the exemption was unlawful.