Tag: affordable housing

COURT HOLDS DENSITY BONUS LAW PROHIBITS CITIES AND COUNTIES FROM REQUIRING PROOF THAT PROJECTS WILL BE “ECONOMICALLY” INFEASIBLE WITHOUT REQUESTED CONCESSIONS AND WAIVERS

The density bonus law (Gov. Code, § 65915) requires cities and counties to allow increased building density, and development incentives and waivers of permit requirements, in exchange for the applicant’s agreement to dedicate a specified number of dwelling units to low or very-low income households. In Schreiber et al. v. City of Los Angeles (Sept. 28, 2021, B303642) __Cal.5th__, the Second District Court of Appeal held that the City of Los Angeles’ municipal code is preempted by the state density bonus law to the extent that the city’s code requires an applicant to prove that the concessions it requests under the density bonus law are needed to make the affordable-housing component of the project financially feasible.

The case involves a mixed-use development in the City of Los Angeles, with retail uses on the ground floor and residential units above. Absent concessions and waivers, the city’s zoning code would limit the site’s development to three stories, a height of 45 feet, and a maximum of 40 units. Under the density bonus law, however, the applicant proposed to develop a seven-story building, with 54 units, including five very-low income units and five moderate income units.

Prior to the city planning commission’s first hearing on the project, the California Legislature passed Assembly Bill No. 2501 (AB 2501), which amended the density bonus law to prohibit local governments from conditioning their review or approval of an application under the density bonus law “on the preparation of an additional report or study that is not otherwise required by law.” (Gov. Code, § 65915, subd. (a)(2).) AB 2501 clarified, however, that local agencies are not prohibited from “requiring an applicant to provide reasonable documentation to establish eligibility for a requested density bonus, incentives, or concessions.” (Ibid.) It also clarified that the term “study” does not include “reasonable documentation to establish eligibility for the concession or incentive or to demonstrate that the incentive or concession meets the definitions” set forth in the density bonus law. (Gov. Code, § 65915, subd. (k).)

Based on AB 2501, the city’s planning department advised that financial pro formas and third-party reviews can no longer be required. Although the applicant had provided financial information regarding the project, in response to city staff’s interpretation of AB 2501, the applicant stated that he would not be providing a pro forma for the project.

Following a hearing, the city planning commission approved the project, including the requested density bonus. The planning commission also approved two “off menu” incentives (increased floor area and maximum height) and two waivers (transitional height and rear yard set back requirements).

The plaintiffs, residents of a nearby single-family home, filed a petition for writ of mandate alleging that the city misinterpreted the density bonus law. In particular, the plaintiffs argued that the city erred in granting the off-menu incentives because the applicant had not submitted financial information showing that the incentives were needed to make the project economically feasible—information that, the plaintiffs observed, was required under the city’s municipal code. The trial court denied the petition and the court of appeal affirmed.

The appellate court explained that under AB 2501’s amendments to the density bonus law, a local government cannot condition its approval of incentives on the preparation of a report that is not otherwise required by law. The city’s municipal code, however, provided that a request for an off-menu incentive must include a pro forma or other documentation showing that the incentive is needed to make the affordable-housing component of the project economically feasible. The court held that the city may not require information that an incentive is necessary to make the project economically feasible because that information is not needed to show that the project is eligible for the incentive. Rather, the “economically feasible” language in the city’s municipal code was based on a prior version of the statute, which required applicants to show that an incentive was necessary to render the affordable units economically feasible. That requirement, however, had been removed from the statute in 2008. Because the city code conflicted with state density bonus law, the court held that the city code is preempted to the extent that it requires an applicant to demonstrate that a requested incentive is needed to make the project economically feasible.

The case provides helpful guidance regarding the documentation that local agencies may require in processing a request for incentives and waivers under the density bonus law. The case clarifies that an agency may not require an applicant to prove that the requested incentives and waivers are necessary to make the affordable-housing component of a project economically feasible. The court’s reasoning in the case is consistent with the requirement that the density bonus law be “interpreted liberally in favor of producing the maximum number of total housing units.” (Gov. Code, § 65915, subd. (r).)

First District Court of Appeal Reverses Denial of Mixed-Use Affordable Housing Project’s Ministerial Approval Under Government Code Section 65913.4

In Ruegg & Ellsworth v. City of Berkeley (2021) 63 Cal.App.5th 277, the First District Court of Appeal reversed the trial court’s denial of appellants’ petition filed after their application for ministerial approval of a mixed-use affordable housing development was denied under Government Code section 65913.4. Finding that the trial court improperly applied a deferential standard of review, the court held that the ministerial approval did not conflict with the City’s “home rule” authority over historic preservation or commercial uses and did not involve demolition of a historic structure that was placed on a historic register.

Background

In 2015, appellants submitted an application for a mixed-use development (the “Project”) in the City of Berkeley (the “City”). The Project is located in the West Berkeley Shellmound, an area designated as a City of Berkeley Landmark and listed in the California Register of Historical Resources. The Shellmound is a sacred burial ground from early native habitation and includes subsurface artifacts, but no above ground buildings or structures. In November 2016, the Berkeley Planning and Development Department (the “Department”) prepared a Draft Environmental Impact Report for the Project application, which concluded that the Project’s impacts on the Shellmound would be reduced to less-than-significant with mitigation measures.

On January 1, 2018, Senate Bill (“SB”) 35 went into effect, which added section 65913.4 to the Government Code. Section 65913.4 requires a streamlined ministerial approval process and an exemption from a conditional use permit for certain affordable housing projects when a locality has failed to provide its share of “regional housing needs, by income category.” In March 2018, appellants submitted an application pursuant to section 65913.4 for the development of 260 dwelling units, 50 percent of which would be “affordable to low-income households,” and retail space and parking. In April 2018, appellants asked the City to suspend processing of the use permit and California Environmental Quality Act documentation for the Project.

On June 5, 2018, the Department provided appellants with the required written response pursuant to section 65913.4, subdivision (b)(2), stating that SB 35 does not apply to the Project because it impinges on “legitimate municipal affairs”— the preservation of a designated City landmark. The Department nonetheless explained that several components of the application were inconsistent with the criteria for approval under section 65913.4. The Department denied the application for ministerial approval after appellants responded to each of the City’s points. Appellants subsequently filed suit.

The Court of Appeal’s Opinion

Demolition of a Historic Structure

The court determined that section 65913.4 is not a historical preservation statute and the term “structure” in section 65913.4, subdivision (a)(7)(C) does not include historical resources or sites. The court reasoned that section 65913.4 thus protects cultural resources differently from historic structures placed on a historic register; a project that threatens the former may obtain ministerial approval if there are no tribal objections, while the latter is ineligible for ministerial approval. While the court acknowledged that the Shellmound is an important historical and cultural resource, it concluded there is no evidence that it is a structure, let alone one that could be demolished by the Project.

Retroactive Application of AB 831’s Tribal Cultural Resource Protections

The court also refused to apply Assembly Bill (“AB”) 831’s tribal cultural resource protections retroactively to the Project application. It determined that the Legislature deliberatively allowed for some projects to proceed without tribal consultation to account for the interests of those who relied on section 65913.4 prior to AB 831’s effective date. The court held that it would be contrary to the Legislature’s intent and manifestly unfair to apply AB 831 retroactively.

The City’s “Home Rule” Authority Over Historic Preservation

Emphasizing the Legislature’s long history of frustration with local governments’ interference with addressing the statewide housing crisis, the court concluded that applying section 65913.4 would not interfere with the City’s “home rule” authority over historic preservation. Determining whether a matter falls within a charter city’s authority to govern itself free of state legislative intrusion requires the court to consider four issues: (1) whether the city ordinance at issue regulates an activity that can be characterized as a municipal affair; (2) whether there is an actual conflict between local and state law; (3) whether the state law addresses a matter of statewide concern; and (4) whether the law is reasonably related to resolution of that concern and narrowly tailored to avoid unnecessary interference in local governance.

The court dismissed the first three parts of the “home rule” test as essentially undisputed. As for the fourth part of the test, the court determined that section 65913.4 is reasonably related to resolving the statewide interest it addresses—affordable housing—and does not unduly interfere with the City’s historical preservation authority. Citing the legislative findings in Government Code section 65589.5, the court concluded that section 65913.4 is narrowly tailored because historical preservation is precisely the kind of subjective discretionary land use decision that the Legislature sought to prevent localities from using to defeat affordable housing development.

Applicability to Mixed-Use Developments

The court held that section 65913.4 applies to mixed-use development projects. The court rejected respondents’ argument that the statute is limited to projects located on sites that meet the minimum residential requirement for mixed-use developments, rather than the actual development that is the subject of the ministerial approval application. The court concluded that the Project at issue satisfied the two-thirds residential requirement, as it includes a residential area that would occupy 88 percent of the development space. The court further explained that regardless of whether the Project should be deemed consistent with this requirement, it is consistent with the standard due to the Department’s failure to timely raise any conflict with respect to the mixed-use aspect of the application in its letter.

The City’s “Home Rule” Authority to Regulate Commercial Uses

The court rejected respondents’ argument that applying section 65913.4 to mixed-use developments interferes with the City’s authority to regulate commercial uses. Applying the “home rule” test, the court found that any interference of section 65913.4 with the local regulation of commercial uses is minimal and incidental to the statute’s purpose of facilitating development of affordable housing. The court acknowledged that the overall Project would not be subject to a conditional use permit, but nothing in the statute permits ministerial approval of a Project with commercial uses that conflict with local zoning.

Conflict with the City’s AHMF and Traffic Capacity Requirements

The court also concluded that respondents’ Affordable Housing Mitigation Fee (“AHMF”) requirements and traffic zoning standards did not provide a sufficient basis for denial of ministerial approval. The court reasoned that the statewide interest served by section 65913.4 should not be defeated by the local AHMF ordinance, which requires a lower percentage of low-income housing than the Project involves. Additionally, the court determined that the traffic zoning standards did not constitute “objective standards” pursuant to section 65913.4 and the City failed to provide adequate written documentation of potential conflicts with any specific criterion for measuring traffic impacts.

More California Cities Eliminate Parking Minimums to Promote Low Carbon Transportation and Affordable Housing

Cities in California are eliminating parking minimum requirements and beginning to implement parking maximums for new construction projects. The hope is that these changes will promote low carbon modes of transportation, such as public transit, biking, and walking and increase affordable housing.

Parking minimums are deeply rooted in planning regulations and city codes. Proponents of eliminating these requirements emphasize that parking minimums can contribute to an overreliance on automobiles, which stunts progress toward more walkable and public transit-oriented development and planning. There is also concern that parking minimums contribute to urban sprawl because the physical space required for parking forces new developments farther from city centers, and that parking minimums encourage less dense development. These concerns have prompted numerous cities throughout the state to revisit their parking policies.

For example, in January 2021, the Sacramento City Council voted to approve citywide zoning reforms in its General Plan, including abolishing parking minimums. Sacramento also pledged to begin studies on parking maximums. These changes will still need to be codified in the city’s zoning code, which will likely be voted on later this year. The city’s shift is designed to reduce car trips, allow more efficient use of land, and provide the density and ridership necessary to support more transit services, which will reduce vehicle miles travelled (VMT) and GHG emissions. Sacramento also hopes that reducing parking in the city will create more space for pedestrian, bicycle, and transit infrastructure, which will help incentivize those modes of travel over single-occupancy vehicles. Public comments at the City Council meeting included some criticism of increasing density, but most comments were supportive of the city’s decision.

Also in January 2021, City of Berkeley officials voted to eliminate off-street parking requirements for new developments. The city determined that parking minimum requirements often thwart the construction of new housing. The city’s changes include exceptions for neighborhoods at risk for fire danger and streets that are narrower than 26 feet. The city also implemented parking maximums in transit-rich areas. Off-street residential parking cannot be offered at a rate of more than 0.5 spaces per unit for projects located within 0.25 miles of a high-quality transit corridor.

In 2018, San Francisco passed an ordinance that eliminated parking minimums citywide, for all uses. Parking is no longer required for any new developments anywhere in San Francisco. Most use types are also prohibited from providing more than 0.5–1.5 spaces, depending on the zoning of the district.

Critics of the elimination of parking minimums are concerned about areas that lack public transit options. This concern is one of the reasons that some cities have not eliminated minimums. In Los Angeles, for example, the public transit system lacks service in many areas and provides much longer travel times than single-occupancy vehicles. Parking minimums in the city require most apartments to provide one or two parking spots per unit and commercial properties are required to have one space for every 100 to 200 square feet, which often amounts to more space for parking than the business itself. Los Angeles’ lack of public transit and sprawling landscape, however, make it more difficult for the city to implement city-wide changes to its parking requirements.

The current housing crisis is another reason some cities are revisiting their parking policies. The elimination of parking minimums for new developments can promote construction of affordable housing. Parking minimums are costly for developers and limit design options. Parking also takes up a substantial amount of space, which reduces the number of housing units that can be built for a given project. Fewer parking spaces could mean more units built per project, with more of those units being designated as affordable. Urban landscapes in California may become more affordable and less polluted as these trends continue to unfold throughout the state.