Housing Accountability Act – A New Hammer for Developers?


​On February 26, 2014, something special happened in San Francisco.  On that date, the Board of Appeals held yet another hearing in a seemingly endless stream of hearings on the beleaguered, 12-unit, code complying residential project at 1050 Valencia Street.  What was special about this day was that, unexpectedly, the Board of Appeals reversed its previous decision, recognizing that the Housing Accountability Act (California Government Code Section 65589.5) limited their authority to dramatically reduce the size and density of the project.  As those that have been following this matter in the press over the last several years know, this was watershed event for a project that had become a punching bag for opposition groups in the vicinity.  Does this mean that the Housing Accountability Act will now become a major force in protecting well-thought-out, code and plan complying projects from unnecessary changes and size reductions in the future?  Time will tell.  In the years to come, looking back, 1050 Valencia may in fact be recognized an as important policy milestone in the City, notwithstanding its small stature.

Housing Accountability Act – The Policy

The Housing Accountability Act has been kicking around since 1982 and has not been a factor in San Francisco development until now.  While today the housing crisis has reached critical levels in places like the Bay Area, housing development has been difficult in California for decades because of laws like CEQA and communities that see growth as the enemy.

 

The Act in effect gives local officials some legal cover when they are besieged by angry project opponents who are intent on stopping housing projects in their neighborhood.  The Act was given new life in 2011 when the California Court of Appeal in Honchariw v. County of Stanislaus (200 Cal.App.4th 1066) ruled that the Act applies to all housing projects, not just affordable projects.  In a nutshell the Act limits local authorities by requiring a very specific set of findings that make it extremely difficult for Cities to reduce the density of a project for subjective reasons like neighborhood character, aesthetics, or other difficult-to-measure (and impossible to challenge) criteria.

For a local agency to condition approval of a housing project on reducing the density of that project to less than proposed and otherwise permitted by law, the agency must determine that the project would have a “specific adverse impact on public health or safety” unless the density is reduced.  That finding simply could not be made for the 1050 Valencia Street project, requiring the Board to withdraw its original condition requiring that the top floor of the Project be removed.

Housing Accountability Act – The Details

Section 65589.5(j) of the Act states that when a proposed housing development complies with the applicable, objective general plan and zoning standards, but a local agency proposes to approve it only if the density is reduced, the agency must base its decision on written findings supported by substantial evidence that:

1. The development would have a specific adverse impact on public health or safety unless disapproved, or approved at a lower density; and

2. There is no feasible method to satisfactorily mitigate or avoid the specific adverse impact, other than the disapproval, or approval at a lower density.

A “significant adverse impact” is defined as a “significant, quantifiable, direct and unavoidable impact, based on objective, identified written public health or safety standards, polices, or conditions as they existed on the date the application was complete.”  This is an incredibly high standard, in that it is difficult to imagine a scenario where a housing project would have a significant negative impact on public health.

At the Board of Appeals meeting on Feb. 26, the project sponsor argued that eliminating the top floor of the Project, as proposed by the Board at their first hearing, would have resulted in a loss of approximately 2,600 square feet of residential floor area. This represented a significant decrease in the proposed density of development. The Board struggled with this issue, and there were two closed door meeting sessions with the Board and the City Attorney to discuss the application of the Act in private before final action was taken.  The Board ultimately decided it could not make the written findings required by the Act.  In effect, the Board acknowledged that the development of new homes in a dense urban area does not threaten public health or safety.  What a shock.

Where We Go From Here

The Act, especially after the Honchariw decision, provides one of the more powerful tools to prevent arbitrary downsizing of projects facing significant neighborhood opposition.  As 1050 Valencia demonstrated, we now know that a fully code-and-plan-complying residential project that needed no other Planning Commission approvals should be “protected” under the Act from significant loss of floor area that would reduce its density.  Will this apply to other projects that must seek some type of Planning Commission approval?  It is hard to say.  The critical language in subsection (j) states that the special findings related to public safety must be made when a project “complies with the applicable, objective general plan and zoning standards.”  What this means in San Francisco is hard to tell. 

Our Planning Code is incredibly complex and very few larger projects are able to obtain building permits “as of right” (i.e. without some type of Planning Commission authorization).  Conditional use projects are probably not protected under the Act, as a conditional use, by definition, must receive a special blessing by the Planning Commission.  However, a number of projects receiving other types of Planning Code approvals, including the relatively new Eastern Neighborhood Large Project Authorization (LPA) process may in fact be protected under the Act.  A project receiving an LPA could be argued to “comply with the applicable objective general plan and zoning standards”, especially if no special exceptions or other variances or waivers are necessary.

San Francisco is a City where developers have few, if any, effective tools to help them process good housing developments in a timely manner and avoid arbitrary downsizing.  This relatively old state law may have just gotten some new life, dropping an important tool into the developer’s tool box.

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.