Land Use Archives

Superior Court Invalidates SB9 in Charter Cities

April 30, 2024April 30, 2024 | Tara Sullivan

On April 22, 2024, the Superior Court issued a decision in City of Redondo Beach et. all, vs. Rob Bonta, et. all. This case centered on the legality of SB 9, which the state legislature passed in 2021. The court held that the legislation was “not reasonably related to ensuring access to affordable housing nor narrowly tailored to avoid unnecessary interference with local government,” thus was in violation of the “home rule” doctrine prohibiting interference with municipal affairs [of charter cities]. At the crux of the argument was whether the legislature’s stated intent of SB 9 – “ensuring access to affordable housing” – was effectuated in the legislation. The court held that it was not.

As a reminder, SB 9 requires that a proposed housing development containing no more than 2 units in a Single-Family residential zoning district be approved ministerially, and that an associated lot split be approved ministerially as well. This legislation was one of many that the state legislature has passed in the last several years to require local municipalities to approve new housing projects.

A key issue in the case was whether SB 9 violated charter cities’ authority to manage “municipal affairs.” The Court noted that under California jurisprudence a state law may overcome the home rule doctrine if it is reasonably related to the resolution of a matter of statewide concern. The Court then applied the four-part test from California Fed. Savings & Loan Assn. v. City of Los Angeles to resolve the issue of whether SB 9 superseded local land use authority. At the end of this test, if “the court is persuaded that the subject of the statute is reasonably related to its resolution [and not unduly board in its sweep] then the conflicting charter city law is no longer a municipal affair and the state law applies.

The Court found, and the parties conceded, that land use and zoning regulations are traditionally local affairs and that SB 9 did indeed interfere with those powers. On the third prong, whether SB 9 dealt with a matter of statewide concern, the parties sought to define what exactly the statewide concern at issue was. Petitioners sought to define the statewide concern as ensuring affordable housing, whereas respondents argued that the matter of statewide concern was addressing the state’s overall housing shortage.

Here, the Court looked at the plain language of the law – SB 9’s legislative intent and purpose was simply “ensuring access to affordable housing is a matter of statewide concern and not a municipal affair” – and adopted a narrow reading of the Legislature’s intention. It held that SB 9 was just about ensuring access to affordable housing, not about the shortfall of housing generally. When respondents argued that specific identification of affordable housing did not necessarily preclude a shortfall in housing from being a matter of statewide concern, the Court was unpersuaded.

On the fourth prong of the inquiry (i.e. whether SB 9 is reasonably related to ensuring access to affordable housing and narrowly tailored to avoid unnecessary interference), the Court first turned to the definition of “affordable” within the context of SB 9. The Court held that the legislatures’ use of “affordable” in SB 9 was in the context of below market-rate housing. It did not agree with the respondents that it meant housing affordability at all levels.

The Court then held that the “broad requirement of ministerial approval of duplexes and urban lot splits does not contain any connection to affordable housing” (as defined as below market-rate units). Therefore, since SB 9 does not contain any below market-rate requirements, there was no evidence that SB 9 would result in the creation of “affordable housing,” basically dashing the argument that SB 9 could satisfy the reasonably related/narrowly tailored prong.

It is important to note that the Court went out of its way to distinguish SB 9 from SB 35 and SB 423, which have specific requirements for below-market rate housing units, and therefore were not subject to this ruling.

Where does this leave SB 9? There are 121 charter cities in California, many of them opposing not only SB 9 but other laws that force ministerial approval of housing projects. However, many jurisdictions have approved SB 9 projects, including San Francisco. Whether the Attorney General’s Office will appeal the ruling is not yet known, however, it is doubtful that this is the last we will hear about SB 9.

Authored by Reuben, Junius & Rose, LLP Attorney Tara Sullivan.

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.

State Law Could Overhaul “Builder’s Remedy”

April 24, 2024April 24, 2024 | Matthew Visick and Melinda Sarjapur

Assemblymember Buffy Wicks has introduced Assembly Bill 1893 (“AB 1893”) to “modernize” the so-called “Builder’s Remedy” that allows projects with enough affordable units to bypass local zoning requirements when a city or county is out of compliance with Housing Element Law. This month, California Attorney General Rob Bonta announced his sponsorship of the bill.

The Builder’s Remedy is part of the state’s Housing Accountability Act (“HAA”) that has been in effect for over 30 years. It prohibits local governments that haven’t met Housing Element deadlines from denying an application to build a housing project based on inconsistency with local zoning controls or a general plan designations so long as the project meets certain affordability requirements.

The Builder’s Remedy has laid idle for decades, but gained visibility and application over the past couple years as the Legislature has continued to strengthen state housing laws and numerous cities dropped the ball on meeting Housing Element deadlines. It is no longer idle. Housing advocacy groups have aggressively promoted the Builder’s Remedy, characterizing it as a “zoning holiday.” Recent news coverage estimates that there are 93 Builder’s Remedy projects across the state that could deliver as many as 17,000 new housing units.[1]

Some cities have attempted to push back against the Builder’s Remedy as an unacceptable intrusion of state law into local land use permitting decisions. These attempts have been met forcefully by the State Department of Housing and Community Development which has issued numerous advisory letters explaining that failure to process Builder’s Remedy projects could expose a city or county to liability under the HAA. The Attorney General’s office has also intervened in litigation to enforce the Builder’s Remedy. Just last month Los Angeles County saw the first court case victory for developers on a Builder’s Remedy project in La Caňada Flintridge, and a fleury of other cases are pending. News coverage suggests that cities and counties have refused to process nearly half of the Builder’s Remedy applications filed based on arguments that it doesn’t actually apply, has been misinterpreted, or is itself unconstitutional.[2]

Developers have also pointed out the difficulty in meeting the affordability requirements of the Builder’s Remedy. Projects must either provide 20% of the units at prices affordable to low-income households or 100% of the units at prices affordable to moderate income households. Given current financial constraints, these affordability levels are often infeasible to meet.

AB 1893 would overhaul the Builder’s Remedy in a number of ways:

Revised Affordability Requirements. AB 1893 would replace the 20% low-income threshold with a 10% very-low-income threshold. The 100% threshold for moderate-income projects would remain. Projects with 10 units or fewer would be exempt from affordability requirements.
Limiting Where Builder’s Remedy Can Apply. Currently, there is no restriction on what sites can apply the Builder’s Remedy. AB 1893 would only allow such projects on sites that permit housing, retail, office, or parking, or agricultural use if 75% of the site perimeter adjoins a site developed with urban uses. Builder’s Remedy would not apply on a site or adjoined to any site where more than 1/3^rd of the existing square footage is dedicated to industrial uses.
Capping Density. AB 1893 would generally cap the residential density of Builder’s Remedy projects to two- to three-times that otherwise permitted by local zoning, depending on whether the site is located in a high-resource area. Additional density (in an amount not yet specified) could be permitted for sites within ½ mile of a major transit stop.
Imposing Objective Development Standards. AB-1893 would require Builder’s Remedy projects to comply with objective zoning standards for the closest zone that allows multifamily residential use at specified density minimums, or if no such district exists, the zone that allows the greatest density in the locality.
Integrating the Builder’s Remedy with Other State Housing Laws. Among other items, this legislation prohibits local agencies from applying objective standards to Builder’s Remedy projects that would physically preclude their construction at the allowed densities or increase “actual costs.” It further clarifies that Builder’s Remedy projects can utilize State Density Bonus Law; that projects meeting residential density standards of AB 1893 will be deemed to satisfy objective density standards for streamlined ministerial development under AB 2011; and that projects meeting residential density and objective criteria of AB 1893 can qualify for qualify for streamlined, ministerial processing under SB 35.

As currently written, AB 1893 would not apply to Builder’s Remedy projects with applications deemed complete on or before April 1, 2024.

The Attorney General argues that AB 1893 is needed to “clarify and modernize” the Builder’s Remedy by “providing clear, objective standards for builder’s remedy projects, including density standards and project location requirements.” It argues that these revisions will make the Builder’s Remedy into “a more effective enforcement tool because local governments will face greater certainty of swift consequences when they do not adopt a timely and substantially compliant housing element.” Finally, the Attorney General argues that AB 1893 will yield better projects by incentivizing “development in urban infill and near transit centers, and promoting higher density housing that is more affordable than single-family homes.”

Opponents argue that AB 1893 will reduce the amount of affordable housing generated and reduce local control over land use permitting decisions.

We understand that some parties (including the Housing Action Coalition and YIMBY Action) are advocating for including the provisions of AB 1893 as an alternative to the existing Builder’s Remedy, but leaving the existing Builder’s Remedy in place for projects that are able to meet the increased affordability requirements and do not wish to be constrained by AB 1893’s limitations on location, density, and design.

AB 1893 passed from the Assembly Committee on Housing and Community Development and Local Government on April 17, 2024. It will next be considered by the Assembly Committee on Local Government. If it is signed into law this year, it would take effect in January 2025.

[1] California’s most controversial housing law, the ‘builder’s remedy,’ could get a makeover – Local News Matters

[2] Id.

Authored by Reuben, Junius & Rose, LLP Attorney’s Matthew Visick and Melinda Sarjapur.

Board of Supervisors Downzones Historic Districts Over Mayor’s Veto

April 3, 2024April 3, 2024 | Sabrina Eshaghi

Last week, the Board of Supervisors voted to override Mayor London Breed’s veto and passed legislation that will effectively downzone certain historic districts in the C-2 zoning district. According to the San Francisco Chronicle, this is the first time the Board has overturned Mayor London Breed’s veto. It also marks a reversal of the trend towards increasing density and eliminating numerical density limits in the City.

In the C-2 zoning district, formed-based zoning currently applies east of or fronting Franklin Street/13th Street and north of Townsend Street, meaning that instead of numerical caps on the number of units, the density is controlled by other development standards like height, bulk, setbacks, open space requirements, etc. The switch to form-based zoning in portions of the C-2 zoning district was just enacted in July 2023 as part of the Downtown Economic Revitalization legislation, which was unanimously approved.

Now, the Board of Supervisors passed legislation to revert back to numerical density limits in the C-2 district for properties within the Northeast Waterfront Historic District, the Jackson Square Historic District, and the Jackson Square Historic District Extension. This will limit density based on the density ratio permitted in the nearest residential zoning district, but no less than one unit per 800 square feet of lot area. The legislation exempts projects utilizing the Commercial to Residential Adaptive Reuse Program from the numerical density limits.

President Aaron Peskin, who sponsored the legislation, stated that it is a reaction to the “unintended consequence” of projects taking advantage of the form-based density in the C-2 zoning district in conjunction with the State Density Bonus Law to propose towers in these historic districts. Public comments specifically referred to State Density Bonus Projects at 1088 Sansome and 955 Sansome, which were proposing a total of 264 housing units.

The Mayor vetoed the legislation, calling it “anti-housing policy in the guise of historic protection.” Supervisors Melgar and Dorsey expressed concerns that as the City moves towards maximizing housing, this legislation would create a problematic precedent that individual supervisors can carve out exceptions to density decontrols. But ultimately, the Board voted 8-3 to override the Mayor’s veto, with Supervisors Melgar, Dorsey, and Engardio voting with the Mayor and against the legislation.

It remains to be seen whether these types of piecemeal exceptions to form-based density will continue to be enacted in response to specific projects. But either way, the Planning Department’s staff report aptly noted that a portion of the area affected by this legislation is currently included in the Planning Department’s rezoning effort in accordance with the Housing Element. If that rezoning scenario is pursued, the staff report states that the Department will likely recommend reinstating form-based density, and approximately 23 parcels that will be subject to numerical density controls under this legislation will revert to form-based zoning within the next year. This begs the question how many other areas will be subject to this type of legislative whiplash as the City grapples with balancing the need for additional housing and preserving neighborhood character.

Authored by Reuben, Junius & Rose, LLP Attorney Sabrina Eshaghi.

Voters Approve Mayor’s Transfer Tax Exemption

March 21, 2024 | Kaitlin Sheber

The Mayor’s proposal to waive San Francisco’s Transfer Tax for certain converted residential space (“Measure C”) was approved by voters on March 5, according to the City of San Francisco’s official preliminary election results. We previously provided an overview of this measure that is aimed at encouraging conversion of office to residential use in the City on October 25, 2023.

Generally, under the new law, up to the first 5,000,000 square feet of “Converted Residential Property” can be exempted from the City’s Transfer Tax. Conversions that involve demolition of nonresidential property to construct new residential property may also be considered Converted Residential Property subject to the tax exemption.

However, the measure caps the amount of new square footage that can be considered Converted Residential Property. For projects where a building is demolished to construct new residential property at the same site, the amount of Converted Residential Property only includes residential square feet in the new building that exceeds the square feet of any residential space in the demolished building, up to a maximum of the total gross floor area of the non-residential space in the demolished building, plus 10%.

According to SPUR, the approval of Measure C comes with the following benefits:

Acceleration of office to residential conversion projects can speed downtown recovery through reducing the cost of development;
Activating obsolete office buildings with housing can increase foot traffic and economic activity;
The Board of Supervisors can make future changes to the transfer tax as needed legislatively, allowing flexibility for the City to make adjustments based on economic conditions

The tax exemption under Measure C applies to the First Transfer of Converted Residential Property—meaning the first transfer after a certificate of final completion and occupancy or temporary certificate of occupancy is issued for the property, whichever is earlier. So, projects will generally see the benefits of Measure C once construction is complete.

The passage of Measure C alone is not expected to close the feasibility gap for most office to residential conversion projects, and additional incentives will be needed to make such projects financially viable.

Authored by Reuben, Junius & Rose, LLP Attorney Kaitlin Sheber.

Legal Victories for CEQA Streamlining

March 6, 2024 | Tuija Catalano and Mark Loper

Earlier this month, the California Court of Appeal ruled that a qualifying development project in San Diego County could use the County’s General Plan Environmental Impact Report (“EIR”) to streamline the project’s environmental review, over the objections of neighbors and the County’s Board of Supervisors. A similar result was recently achieved in San Francisco. RJR partner Tuija Catalano secured a victory at the Board of Supervisors for a housing project, with the Board determining that the project properly used San Francisco’s recently certified Housing Element EIR to streamline CEQA processing for the project. The Court of Appeal’s opinion further strengthens the use of CEQA streamlining and exemption provisions and validates San Francisco’s established process of “tiering” project specific CEQA review off its General Plan and Area Plan EIRs.

In San Diego, County planning staff determined that a recycling plant project that was consistent with the County’s most-recent General Plan could be evaluated for a CEQA evaluation pursuant to CEQA Guidelines Section 15183, which generally limits the CEQA evaluation for a project consistent with a General Plan (including a Housing Element) or an Area Plan to potential unique (“peculiar”) impacts. After several technical studies confirmed the recycling center project did not result in significant or peculiar impacts not already evaluated in the General Plan EIR, County staff prepared a 15183 evaluation with mitigation measures from the General Plan EIR’s Mitigation Monitoring and Reporting Program.

If that fact pattern sounds simple enough, the administrative CEQA review process was actually more complicated and unfavorable for the developer: the developer originally pursued an initial study to prepare either an EIR or Negative Declaration before pivoting to a 15183 evaluation only after all of the background technical studies were completed. The Board of Supervisors sided with neighbors and upheld an administrative appeal over the recommendation of the staff to deny the appeal. The trial court also sided with the Board of Supervisors. The Court of Appeal reversed the trial court’s decision with a surprisingly straightforward opinion.

Importantly, the Court held that the project could pivot to a 15183 evaluation and confirmed the eligibility of this streamlining evaluation for projects using a General Plan or Area Plan. The Court next found that the Supervisors failed to base their conclusions on any substantial evidence in the record. It also explicitly rejected layperson testimony from neighbors at the Board of Supervisors appeals hearing (related, it also confirmed that the substantial evidence standard—which is less deferential—applied even when a court reviews a city or county’s determination an exemption is not applicable). The crux of the Court’s argument:

the Board of Supervisors failed to identify the specific nature of the … project’s ‘peculiar’ impacts that required environmental review, except to point to broad environmental categories. Nor did the Board of Supervisors address, with specificity, the effect of uniform policies and procedures on their purported impacts.

Hilltop Group, Inc., et al v. County of San Diego, et al. (2024) ___ Cal.App.5th ___.

The Court’s opinion confirms the use of 15183 can be appropriate, even for a large-scale project like a recycling plant, and should make cities and counties more comfortable using their General Plan or Area Plan EIRs on larger-scale projects. The opinion also emphasizes that politics only goes so far when an administrative record is lacking: a city or county cannot simply decree that a certain environmental topic addressed in a 15183 exemption— for example, preservation—is not adequately analyzed. The local agency needs to provide specifics with adequate factual and legal backing (as mentioned above, “lay opinion and personal observations” by neighbors was not substantial evidence). And that determination needs to address why mitigation measures or otherwise-applicable laws could not further reduce or eliminate the peculiar impacts.

Closer to home, San Francisco has a 15-year history of using CEQA Guidelines Section 15183 in the context of Plan Area EIRs (such as Eastern Neighborhoods Plan Area EIR and Central SoMa Plan Area EIR) to issue Community Plan Evaluations for projects within the applicable Plan Areas. With the certification of San Francisco’s Housing Element (2022 Update) EIR in November 2022, many projects outside Area Plans became eligible for similar streamlined CEQA review based on the General Plan (i.e. Housing Element) EIR that applies Citywide.

On February 6, 2024, the Board of Supervisors heard the first CEQA General Plan Evaluation appeal, and with a 10-1 vote the Board found that the use of Section 15183 streamlining provision based on the Housing Element EIR was proper. The recent Board of Supervisors appeal decision, as well as the San Diego Court of Appeal opinion are important. Cities and counties can look to these decisions to support streamlined process based on General Plan EIRs on projects that are consistent with the development density within the General Plan policies. The Board decision and the Court of Appeal opinion are especially good news for projects that are located outside Area Plans that until now were required to complete a negative declaration or an EIR if they were not eligible for any of the categorical CEQA exemptions.

uthored by Reuben, Junius & Rose, LLP Attorneys Tuija Catalano and Mark Loper.

2023 Housing Legislation Round-Up

October 18, 2023October 18, 2023 | Justin A. Zucker

Like last year, 2023 was a stellar year for housing legislation in California. Last week, Governor Gavin Newsom signed into law more than forty-five bills related to housing and housing production. Below is a brief overview of thirteen housing bills signed by the Governor becoming effective January 1, 2024, relating to the State Density Bonus Law, housing policies, and parking.

Density Bonus Law Updates

AB 1287 (Alvarez) Additional Density Bonus Layer. This bill adds another density bonus layer option to the State Density Bonus Law. If additional very low income or moderate income units are provided, a project is eligible to receive up to an additional 20% to 50% density bonus on top of the base density bonus, provided no more than 50% of the total units would be restricted as affordable. In addition, this bill alters the definition of “maximum allowable residential density” to mean the greatest number of units allowed under the zoning ordinance, specific plan, or land use element of the general plan, or, if a range of density is permitted, the greatest number of units allowed by the range. This bill clarifies that a local government is not prohibited from requiring reasonable documentation to establish eligibility for a requested density bonus and parking ratios. This bill also authorizes up to four incentives or concessions for projects that include at least 16% of the units for very low income households or at least 45% of the units for moderate income households in for sale projects.
SB 713 (Padilla) Development Standard Definition Adjustment. This bill amends the definition of “development standard” to include regulations adopted by a local government or enacted by the local government’s electorate. SB 713 codifies a recent technical assistance memorandum from the Department of Housing and Community Development (“HCD”) that explicitly re-states existing law, that local governments cannot impose standards that stop state density bonus projects from moving forward.

California Environmental Quality Act (“CEQA”)

SB 423 (Wiener) SB 35 Extension and Expansion. This bill extends SB 35 (2017, Wiener), which is currently set to expire January 1, 2026, and expands its applicably, including into the coastal zone. A more robust overview of SB 423 can be found here.
AB 1449 (Alvarez) 100% Affordable Housing Exemption. This bill, until January 1, 2033, exempts 100% affordable housing projects from CEQA. While there are other tools available to make 100% affordable housing projects ministerial and not subject to CEQA, e.g., SB 35 (2017, Wiener), there are no workforce standards tethered to AB 1449.
AB 1633 (Ting) Housing Accountability Act Protection Extended to CEQA Review. This bill would expand the Housing Accountability Act’s definition of “disapprove the housing development project” to include any instance when a local agency fails to issue an exemption, fails to adopt a negative declaration or addendum for the project, or certify an environmental impact report or another comparable environmental document. This bill also clarifies “that attorney’s fees and costs shall rarely, if ever, be awarded if a local agency, acting in good faith, approved a housing development project.” The bill’s provisions sunset January 1, 2031.

Accessory Dwelling Units (“ADUs”)

AB 976 (Ting) No Owner-Occupancy Requirement. This bill makes permanent an existing prohibition to imposing an owner-occupancy requirement on an ADU that sunsets January 1, 2025.
AB 1033 (Ting) ADU Condominiumization. This bill allows a local jurisdiction to permit condominiumization and sale of ADUs separate from the primary residence.
AB 1332 (Carillo) Pre-Approved ADU Plan Sets. This bill requires jurisdictions, by January 1, 2025, to develop a program for the preapproval of ADU plans. This bill also requires local governments to approve a detached ADU project utilizing preapproved plans within thirty days.

Housing Policies

SB 439 (Skinner) Priority Housing Development Projects. This bill would allow a party to bring a motion to strike any part of a pleading in a lawsuit challenging approval of a priority housing development project within sixty days of service of the complaint or administrative record. A “priority housing development” is defined as a 100% low income affordable project.
AB 1218 (Lowenthal) SB 330 Amendments. This bill tweaks SB 330 (2019, Skinner) extending the protected unit demolition and replacement controls, which currently only apply to housing development projects, to projects that are not considered housing developments. This bill would also place the restrictions on demolition of protected units and replacement requirements into separate provisions (Government Code Sections 66300.5 and 66300.6) that will apply permanently. Those controls would otherwise become inoperative on January 1, 2030.
AB 1485 (Haney) State Intervention in Actions Involving Violations of Housing Laws. This bill grants the Attorney General and HCD an unconditional right to intervene in any lawsuit filed over a potential violation of an enumerated list of state housing laws, including, among others, the Housing Accountability Act, Housing Crisis Act of 2019, and the Density Bonus Law.
AB 572 (Haney) HOA Assessment Limits for Affordable Units. This bill places a cap on assessment increases a condominium homeowners association (“HOA”) could impose on a deed-restricted affordable unit, subject to certain exceptions. A more robust overview of AB 572 can be found here.

Parking Controls

AB 1308 (Quirk-Silva) Parking Requirements for Single-Family Homes. This bill prohibits a local jurisdiction’s ability to increase the applicable minimum parking requirements that applies to a single-family residence as a condition of approval of a project to remodel, renovate, or add to a single-family residence, provided it does not cause the single-family residence to exceed any maximum size limit imposed by the applicable zoning regulations, including, but not limited to, height, lot coverage, and floor-to-area ratio. This bill complements AB 916 (2022, Salas), which prohibits cities from requiring a public hearing as a condition of reconfiguring space to increase bedroom count within an existing dwelling unit.
AB 1317 (Carrillo) Unbundled Parking for Residential Property. This bill requires landlords to “unbundle” parking costs from rent for leases or rental agreements for residential property in Alameda, Fresno, Los Angeles, Riverside, Sacramento, San Bernardino, San Joaquin, Santa Clara, Shasta, and Ventura counties, commencing or renewed on or after January 1, 2025.

Authored by Reuben, Junius & Rose, LLP Attorney Justin A. Zucker.

Legislation to Overhaul Residential Building & Zoning Standards

August 21, 2023August 22, 2023 | Tara Sullivan

On June 29^th, the San Francisco Planning Commission voted to recommend approval of Mayor Breed’s proposed legislation titled “Housing Production” (BOS File No. 23-0446). The legislation amends the Planning Code to encourage housing production by focusing on the controls that mainly apply to Residential and Neighborhood-Commercial Districts. This legislation is proposing significant and far-reaching changes that will greatly change how residential projects are developed, for the better.

First, the legislation proposes to reduce the number and type of projects that require Planning Commission hearings. The major changes are below:

Eliminate Conditional Use Authorization (“CUA”) / Planning Commission Hearing / Neighbor Notice

The legislation also proposes to modify some of the more basic building standards that apply to most properties in the city: setbacks, open space, and lot area requirements. If passed, these changes would be the most radical to residential projects in decades. A summary of the significant changes are below.

Required Rear Yard (Section 134)

Lot Size (Section 121, 121.1)

Front Yard/Setback (Section 132)

Usable Open Space (Section 135)

There are several other changes proposed, but the above are the most far-reaching. The legislation is currently awaiting a hearing at the Land Use & Transportation Committee, which may happen once the Board of Supervisors returns from their summer recess. As with any legislation, changes may occur before it is finally passed, but it is expected to pass largely as-is.

Reuben, Junius, & Rose, LLP will continue to monitor this legislation and provide an update once passed.

Authored by Reuben, Junius & Rose, LLP Partner Tara Sullivan.

LA Court Weighs In on the Builder’s Remedy

July 26, 2023July 26, 2023 | Sabrina Eshaghi

Until now, the notorious “builder’s remedy” had not been tested in court, leaving developers with serious questions about how it works and whether it’s worth potential legal challenges from unamenable cities. Recently, however, a superior court in Los Angeles referenced the builder’s remedy in a ruling that implied the remedy is available in the City of La Cañada Flintridge. This case, and others that are still in the pipeline, will have significant implications for developers who have filed builder’s remedy projects, or are considering doing so, as well as for cities across the state.

Builder’s Remedy

According to the HCD’s Housing Element Review and Compliance Report (as of 7/24/23), only 33 out of 109 Bay Area jurisdictions have adopted fully compliant Housing Elements. As discussed in our previous e-update, the deadline for Bay Area cities and counties to revise housing elements has passed, and those that remain noncompliant have opened themselves up to builder’s remedy projects.

The builder’s remedy is a mechanism in the Housing Accountability Act that prohibits any city that has not adopted a compliant housing element by the required deadline from applying its general plan and zoning standards to reject certain housing development projects. To qualify for the builder’s remedy, a project must provide either 20% of the units as affordable to 80% AMI households (low-income), or 100% of the units as affordable to 120% AMI households (moderate-income).

Because the builder’s remedy has never been tested in court, there is uncertainty about how the builder’s remedy applies in practice and how cities will process these projects. Many cities that failed to adopt compliant housing elements have openly defied state law by stating that the builder’s remedy doesn’t apply to them or by passing an ordinance banning builder’s remedy projects.

La Cañada Flintridge Case

Southern California jurisdictions were required to adopt their updated Housing Element by October 15, 2021. The City of La Cañada Flintridge adopted its Housing Element on October 4, 2022, which was determined to be inadequate by HCD. On February 21, 2023, the city adopted an amended Housing Element, which HCD again found to not be in substantial compliance with state law.

While stopping short of confirming HCD’s finding and determining whether the substance of the city’s Housing Element complied with state law, the court found that the Housing Element is not in compliance with state law because the city missed mandatory deadlines. Specifically, the city failed to adopt a Housing Element within 120 days of the deadline and was therefore subject to the penalty requiring it to complete its rezoning within one year of the statutory deadline-i.e., by October 15, 2022- instead of the three years otherwise permitted. Because the city’s challenged Housing Element was not adopted until February 21, 2023, and the Housing Element had still not been certified by HCD, the court was required to find that the city’s Housing Element will not be in substantial compliance with the Housing Element Law until the required rezoning is complete. This appears to put to rest the idea that a city can avoid all the consequences of failing to obtain HCD certification by “self-certifying” its own Housing Element.

Although the city argued that the timelines under the Housing Element Law are purely directory, the court disagreed and confirmed that the timelines are mandatory. In making that finding, the court looked to the penalties that apply for missing the deadlines and confirmed “there are at least two significant penalties for failing to timely adopt a housing element. First, there is the rezoning penalty…that is the subject of this litigation…Second, the HAA contains [the] builder’s remedy that limits a city’s ability to deny a development for low-cost housing unless its housing element…is in substantial compliance with the Housing Element Law.” To our knowledge, this is the first time a court has opined on or directly referenced the builder’s remedy by name.

The court did not issue an explicit declaration that the builder’s remedy applies in the city because the organization that filed the lawsuit, Californians for Homeownership, did not have legal standing without a pending project. Nevertheless, the judge seemed to signal that a developer with a pending project may be able to obtain such a declaration.

The court’s acknowledgment of the builder’s remedy is a positive sign for those with a pending builder’s remedy project. According to the Real Deal, the president of the California Association of Realtors said in a statement, “For far too long, certain cities and counties have treated compliance with state housing laws as optional. This decision sends a clear message: complying with these laws is not optional.”

As discussed in our previous e-update, other housing advocacy groups have also filed lawsuits against jurisdictions that are out of compliance with the Housing Element Law. We will continue to keep you updated as decisions are issued in these cases.

Authored by Reuben, Junius & Rose, LLP Attorney Sabrina Eshaghi.

Proposed Legislation to Expand Allowed Commercial Uses

June 22, 2023June 22, 2023 | Chloe Angelis

In the latest effort to ease longstanding zoning restrictions and encourage new business activity in San Francisco, Mayor Breed (along with Supervisors Engardio, Dorsey, and Melgar) have introduced legislation to expand the types of uses permitted in Neighborhood Commercial Districts (“NCDs”), streamline the change of use process in Eastern Neighborhood Mixed Use Districts, and incorporate numerous other Planning Code changes aimed at filling retail vacancies throughout the city.

Unlike a number of other recently proposed changes, this legislation would not limit the amendments to Downtown. Instead, it focuses on neighborhood commercial corridors and on expanding permissible uses and streamlining the change of use process for certain use types across the city. With retail vacancies in San Francisco as high as 14.8%,[1] any change that allows more categories of business to occupy empty commercial storefronts in more zoning districts would be a welcome policy change.

The 92-page ordinance has yet to be heard by the Planning Commission or the Land Use and Transportation Committee, so a lot could change between now and final passage, but here is a summary of some of the more meaningful changes proposed:

Professional Services Uses: Arguably the most substantive and exciting change is a proposal to eliminate the distinction between Retail Professional Services and Non-Retail Professional Services. Currently, Non-Retail Professional Services include businesses that provide services to other businesses, like accounting, legal, insurance, advertising, and consulting offices. Retail Professional Services cover uses primarily open to the general public—in other words, offices where a member of the public can walk in to talk to a lawyer, travel agent, or accountant. As drafted, the legislation would principally permit all types of Professional Services Use (both retail and non-retail types), within all NCDs and Chinatown mixed use districts. This opens up the possibility of office-type uses operating in ground and upper-level spaces in neighborhood commercial corridors throughout the city.
Section 311 Notice: The proposed ordinance would eliminate Section 311 notice for change of use projects in Eastern Neighborhoods Mixed Use Districts—doing away with the possibility of a discretionary review hearing for those projects. 311 notice would still apply to formula retail and substantial construction projects in those districts.
Legalization of Existing Outdoor Activity Areas: The proposed ordinance would allow business owners citywide to legalize an Outdoor Activity Area via a building permit, provided the Zoning Administrator or Planning Staff determines that the outdoor space has been operating (mostly continuously) for the last 10 years. No Conditional Use (“CU”) Authorization would be required for these legalizations, but a building permit would need to be filed within one year from when the proposed ordinance becomes effective.
Flexible Retail Uses: Previously limited to properties in Districts 1, 4, 5, 10 or 11 and zoned NCD, NCT or NCS, the legislation proposes to allow Flexible Retail Uses citywide. Flexible Retail Uses are defined as the combination of at least two of the following uses: Arts Activities, Limited Restaurant, General Retail Sales and Services, Professional Services, and Trade Shop.
Formula Retail in Residential Districts: The legislation would allow Formula Retail uses in RH and RM districts with approval of a CU.
Special Use District Controls: A number of proposed amendments ease controls on eating, drinking, and entertainment uses within Special Use Districts (“SUDs”). Here are a few highlights:
- Allow new Restaurant, Limited Restaurant, and Bar uses on the first story in the Jackson Square SUD, with approval of a CU.
- Allow a Music Entertainment Facility in the Mission Alcohol SUD to serve alcohol with an ABC Type 90 license.
- Non-Formula Retail Restaurants and Limited Restaurants would be principally permitted within the Taraval Street Restaurant Subdistrict (i.e., no CU for these uses).
- Permit Financial Service and Limited Financial Service uses with approval of a CU in the Chestnut Street Financial Service Subdistrict.
- Allow new Liquor Establishments with approval of a CU in the Haight Street Alcohol Restricted Use Subdistrict.
Expedited CU Review: The legislation would allow Nighttime Entertainment and Non-Retail Sales and Services uses (including Professional Services) (that meet other eligibility criteria) to be eligible for the Community Business Priority Processing Program, which aims to schedule eligible projects for a consent calendar Planning Commission hearing within 90 days of the application being deemed complete. Many non-Formula Retail commercial uses are already eligible for this program.
Miscellaneous Changes: Other one-off exciting changes include the following:
- Financial Services would be allowed on the ground floor with approval of a CU in many NCDs.
- Professional Services and Design Professional uses would be allowed at the ground floor in the North Beach NCD.
- The Sacramento Street NCD would permit Bars on the first story with a CU, and Gyms and Health Services would be principally permitted on the ground floor.
- The Union Street NCD and Pacific Avenue NCD would allow Bars on the first story with a CU.
- The West Portal NCD would permit Financial Services on the ground floor with a CU, and Health Services and Design Professional uses would be principally permitted on the first and second floor.
- Allow new Restaurants, Limited Restaurants, and Bars within the Mission Street NCT, up to an increased maximum of 197 locations (up from 167). Full-service Restaurants and Bars allowed within the cap would still require a CU.
- New Bars and Restaurants would be permitted in the 24th Street-Mission NCT with approval of a CU, subject to the limitation of the Calle 24 SUD.

In the current market, any kind of storefront activation is good for the health of commercial corridors, and it seems that the prevailing political opinion finally agrees. This piece of legislation is just at square one of the process, and you can track its progress here.

[1] See Cushman & Wakefield San Francisco North Bay Metro Retail Q1 2023 Report; available at https://www.cushmanwakefield.com/en/united-states/insights/us-marketbeats/san-francisco-north-bay-marketbeats (accessed June 21, 2023.)

Authored by Reuben, Junius & Rose, LLP Attorney Chloe Angelis.

The Basics: Easements and Their Relocation

June 1, 2023June 1, 2023 | Corie A. Edwards

When an easement is granted, a property owner gives another person an interest in and right to use the land which is burdened by the easement. Easements are often conveyed, for example, to give an adjacent property owner a right to cross over the land, install utilities below the surface of the land, or otherwise use the land in a way that does not prevent the landowner from continuing to use its land. In most cases, an easement runs to the benefit of an adjacent property, rather than benefitting a particular person. Accordingly, easements are generally recorded in the official records of the county where the land is located, and are valid for an extended or unlimited period of time.

A well-drafted easement agreement typically includes terms that identify the land which is burdened by and benefits from the easement, describes the location of the easement, outlines how the easement may be used (and any limitations on its use), states how long the easement will remain in place, and explains how and under what circumstances it may be terminated. The agreement may also include terms about how the easement will be maintained and at whose cost, establish indemnity and insurance obligations, and provide for dispute resolution. But the property owner who grants the easement should also consider how its property may be used going forward, and whether it may wish to relocate the easement in the future. Unless relocation rights are reserved, the owner of the burdened property may be unable to relocate the easement in the future, unless it obtains consent from the owner of the easement. That gives the easement owner considerable power to, for example, prevent development or otherwise interfere with the burdened property owner’s ability to use its land.

In an effort to address this inequity, in July of 2020, the Uniform Easement Relocation Act (“Act”) was adopted by the Uniform Law Commission, also known as the National Conference of Commissions on Uniform State Laws. Generally speaking, in jurisdictions where the Act is enacted, the owner of land burdened by an easement is allowed to relocate the easement without the consent of the easement owner. The Act applies to easements conveyed before, on, or after the date when the Act is adopted. And the Act does not allow the owner of the burdened property to waive or otherwise restrict by agreement its right to relocate the easement.

The relocation rights established by the Act are not unlimited. For example, the Act does not apply to public utility, conservation, or negative easements (i.e., an easement that restricts the use of property). If an easement is of a type which may be relocated, the proposed relocation may not hinder the utility of the easement, increase the burden on the owner of the easement, impair the purpose for which the easement was created, or impair the physical condition of value of the easement owner’s property, among other requirements. The owner of the land burdened by the easement is not permitted to disrupt the use of the easement during relocation, unless the nature and disruption of the disruption is “substantially” mitigated.

A property owner who wishes to relocate an easement using the Act is required to file a lawsuit to obtain a court order to allow the proposed relocation. The lawsuit must be filed against the owner of the easement, any lender that holds a security interest in the property, and any lessee of the easement owner’s property, at a minimum. Assuming that the court makes the factual determinations required by the Act – i.e., that the easement is of a type that may be relocated and that the Act’s conditions on relocation are satisfied – it may issue an order approving the relocation. A certified copy of the order must be recorded in the official records of the county in which the burdened land is located.

When an easement is relocated pursuant to a court order issued under the Act, the owner of the burdened property is obligated to pay all reasonable expenses associated with the relocation. The easement owner has a duty to cooperate with the relocation in good faith. When the relocation is complete, the burdened property owner must record and serve a certification that the easement has been relocated. But, if no improvements must be constructed in connection with the relocation, the recorded court order – alone – is sufficient to constitute the completed relocation.

Thus far, only Nebraska, Utah, Washington and Arkansas have enacted the Act. It is not clear whether the Act will be adopted in California or when. But until such adoption, property owners who elect to convey easements to others should consider expressly reserving the ability to relocate the easement if circumstances warrant.

Authored by Reuben, Junius & Rose, LLP Attorney Corie A. Edwards.