Major Builder’s Remedy/Housing Litigation Win

| Thomas P. Tunny
housing element

In a litigation result that will have a number of positive consequences for developers and housing advocates, the City of La Canada Flintridge (“City”) last week moved to dismiss its appeal of a closely-watched “Builder’s Remedy” case. After the appeals court ordered the City to post a $14 million bond on appeal, the City chose not to do so and will now comply with the trial court decision and process a housing application to build an 80-unit apartment project (“Project”).

Readers may recall us reporting on this litigation previously. (California Housing Defense Fund v. City of La Cañada Flintridge (L.A. Sup.Ct. No. 23STCP02614 and 2DCA No. B338985).) In May 2023, the City Council determined the Project did not qualify for the Builder’s Remedy, in part because the SB 330 Preliminary Application was filed after the date that the City Council (retroactively) self-certified its Housing Element update. Later that month, the City informed the Project developer that its SB 330 Preliminary Application was complete, but maintained its position that the Builder’s Remedy did not apply to the Project.

The developer petitioned the Los Angeles Superior Court for a writ of mandate, alleging that the City violated the HAA, State Housing Element Law, and other state laws. The Superior Court granted the writ, making four key rulings:

  1. the City cannot “self-certify” its housing element;
  2. the Builder’s Remedy is “vested” on the date a complete SB 330 preliminary application is submitted;
  3. the Builder’s Remedy is available until any required rezoning is completed; and
  4. the City unlawfully “disapproved” the Builder’s Remedy Project.

The Court’s ruling in effect means a City can’t back-date its Housing Element compliance to avoid approving a Builder’s Remedy project.

The Court of Appeal’s decision to require such a substantial bond (the City’s entire budget is $42 million) not only reinforces the pro-housing intentions of the Builder’s Remedy, Housing Element, and HAA rules, but also puts cities and counties on notice with respect to processing housing projects. In this case, not only did the City lose the litigation, but it likely will have to pay the petitioners’ attorney’s fees, and the developer may recover millions in losses incurred due to the appeal. Local jurisdictions seeking to continue old strategies of baselessly denying housing projects will have to think twice going forward about the potential costs.

 

Authored by Reuben, Junius & Rose, LLP Partner, Thomas P. Tunny.

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.

Objective Standards for Housing Projects – The Next Battleground?

| Andrew J. Junius
housing

In November of last year, to little fanfare, the San Francisco Planning Department presented to the Planning Commission its new Citywide Objective Design Standards. San Francisco, like cities across the state, are grappling with the brave new world of objective standards as required by recent housing legislation out of Sacramento. As the dust settles around the new and improved Housing Element process, the next battleground will be over individual projects, and each jurisdiction’s take on how to implement “objective standards.”

The need for objective standards is straightforward: as the state took dramatic action to jumpstart housing production by removing local zoning barriers, the focus was on eliminating local discretion for qualifying housing projects. In other words, planning commissions and city councils could no longer determine that a proposed housing project, while compliant with all local zoning, density and height controls, simply did not fit into the neighborhood character, was too big, blocked views, and generally displeased existing residents. That discretion – used by cities across the state – is why California doesn’t have enough housing. For decades, local residents have been leaning on their city officials to stop these projects. And in many cities they have succeeded.

No longer able to defer to local discretion, planning departments were charged with making sure that housing projects would only be evaluated with respect to objective standards. What is an objective standard? The California Housing Accountability Act (amended in 2017) defines objective standards as those that “involve no personal or subjective judgment by a public official and are uniformly verifiable by reference to an external and uniform benchmark or criteria available and knowable by both the developer, applicant or proponent and the public official before submittal.”

This created an immediate challenge to planning departments across the state. While all city planning and zoning codes do have objective standards (i.e., numbers like height limits, floor area ratios, and the like), they also included a significant number of discretionary standards and processes. One would think that removing these discretionary provisions from planning codes and simply leaving the objective numbers would be a straightforward process. In other words, if a housing project in a certain zoning district required a conditional use authorization previously (a conditional use approval requires a Planning Commission to make very subjective findings regarding whether the project will be necessary and desirable and otherwise good for the neighborhood…) it should be a simple matter to remove that requirement and get on with it.

In many instances, that has simply not been the case. Discretionary and objective standards and procedures for many cities have been woven tightly together and cannot be easily untangled. At times there is even a debate over what is objective and what is subjective. And of course, such changes in local planning codes require legislative action by city councils.

Some California jurisdictions have attempted to comply with relatively minor changes to their code, claiming that these are in fact, “objective”. However, careful review of these minor changes reveals that there are still portions of their code purporting to protect views, “harmonize” the development with surrounding character, etc., etc. The subjective criteria that remain are not objective and would not pass muster if challenged.

Other jurisdictions, including San Francisco and Marin County, have taken a very different approach. In these cases, the Planners have gone to extraordinary lengths to provide an objective standard for virtually every aspect of a development, from site design, height limits, building modulation, etc., down to the more nuanced details for lobby and building entrance design and location, window location and design, façade treatment, building articulation, blind walls, and more. Marin County’s form-based code clocks in at a formidable 323 pages of objective standards.

It’s hard to predict how this will all work out in the months and years ahead. Now that the Housing Element battles are for the most part over (or at least not at full boil), the project-by-project housing battles have begun. We commend the state legislature’s efforts to prioritize housing production the only way it can: by removing the ability of cities to say no to qualifying housing projects. We hope that cities across the state will see the need for housing as critical and will work to implement these state laws as quickly and efficiently as possible.

 

Authored by Reuben, Junius & Rose, LLP Partner, Andrew J. Junius.

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.

Court Broadens Applicability of CEQA Infill Exemption

| Thomas P. Tunny
CEQA

Readers no doubt are aware of the CEQA Infill Exemption, one of the most common CEQA exemptions used for projects in San Francisco and the Bay Area. In an important opinion published on November 18, the Sixth District Court of Appeal interpreted key terms in the Infill Exemption (CEQA Guidelines Class 32 categorical exemption) to broaden its application, in particular “in-fill development” projects that meet specified criteria, including being “substantially surrounded by urban uses.” In doing so, the Court upheld a lower-population city’s use (King City) of the exemption for a Grocery Outlet project near Highway 101. (Working Families of Monterey County, et al. v. King City Planning Commission (Best Development Group, LLC, Real Party in Interest) (2024) ___ Cal.App.5th ___.)

The project at issue was a Grocery Outlet store in a single-story building with surface parking on a 1.6-acre lot located within 1,000 feet of Highway 101. The parcel’s General Plan land use designation was Highway Service Commercial (HSC) and its zoning designation was Highway Service District (H-S). It was surrounded on two sides by commercial buildings, on the third side by sheriff’s department buildings, and on the fourth side by a cemetery.

An environmental assessment submitted by the project developer in support of the project’s permit applications (for a CUP, architectural review, monument sign permit, and landscaping permit) concluded the project would not result in any significant environmental impacts relating to traffic, noise, air quality, water quality, or otherwise, and that it qualified for the CEQA Guidelines Class 32 exemption for in-fill development. The City’s Planning Commission agreed on all counts, and its decision approving the project entitlements and exemption was upheld by the City Council, which did the same on administrative appeal.

The Petitioners, a union, sought to have the court narrow the infill exemption by arguing the project was not located in an “urbanized area,” as defined in CEQA Section 21071(a) (population 100,000 or more) or CEQA Guidelines Section 15387 (population 50,000 or more). Petitioners also alleged the project did not meet the definition of an “infill site,” as defined in CEQA Section 21061.3, since the project site was not previously developed for “qualified urban uses.”

The court refused to take the bait and turned to traditional rules of statutory construction to discern the meaning of these key terms. Finding the language of the exemption arguably ambiguous, the court looked to the findings of the Natural Resources Agency and the Office of Planning and Research (“OPR”) in establishing the exemption. Their statements of regulatory intent showed no indication that the regulators intended to limit the Class 32 categorical exemption for infill development to projects that meet the criteria set forth in the statutory definitions of “infill site,” “urbanized area,” and “qualified urban uses”.

Citing OPR directly, the court concluded, with a flourish, “The term ‘infill development’ refers to building within unused and underutilized lands within existing development patterns, typically but not exclusively in urban areas. Infill development is critical to accommodating growth and redesigning our cities to be environmentally- and socially-sustainable.” This broad definition will allow the Infill Exemption to be used in areas that may not meet specific definitions of “urban”, but as a matter of common sense are clearly “urbanized”. This decision is important because it reinforces and even broadens the applicability of the Infill Exemption in both typical urban areas and smaller cities.

 

Authored by Reuben, Junius & Rose, LLP Partner, Thomas P. Tunny.

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.

San Francisco Building Department Updates

| Gillian Allen

Some exciting improvements and developments at the Building Department have been published in the past few weeks including the guidelines for adaptive reuse projects converting downtown commercial offices into multi-family residential buildings and a streamlined ADU review process. See below for the direct updates from San Francisco Department of Building Inspection.

Converting Downtown Commercial Offices into Multi-Family Residential

Multiple agencies came together to work on final guidelines for commercial to residential adaptive re-use projects and the result is a thoughtful and comprehensive clarification of building code provisions and local equivalency processes that may present developers and design professionals options which could enable many more potential projects to pencil out without sacrificing code compliance.

Throughout this incredibly extensive information sheet, the authors did a great job of providing clear and detailed information on how to approach equivalencies for building envelope, exterior walls and openings, means of egress, ventilation, lighting, unit size, earthquake safety, accessibility, high-rise and low-rise structures, use of the California Historic Building Code, and the San Franciscos Green building code. Some of the highlights include the following:

  • Dwelling unit sizes may meet the minimum size for new construction instead of the larger dimensions required for existing buildings. This will require approval of local equivalency through the SFDBI Administrative Bulletin AB-005 process.
  • Qualified historic buildings are permitted to use existing fire escapes per CHBC 8-502.5 where the fire escapes are inspected and improved to comply with SFDBI Administrative Bulletin AB-019.
  • Existing elevators in low-rise buildings can remain unchanged in a downtown adaptive reuse project and do not need to be upgraded to meet the current code requirements for gurney size, hoistway construction or Firefighters Emergency Operation.
  • High-rise structures over 120’ that do not have fire safe access elevators or do not house two elevator banks, and a hardship to install a new fire safe access elevator exists, may propose alternative equivalent facilitations to satisfy CBC 3003 FSAE.
  • Link to full Information Sheet G-29.

ADU Roundtable

The City has also recently launched a new service to streamline and speed up the review and issuance of Accessory Dwelling Unit (ADU) building permits submitted through the State or Hybrid Program.

The Permit Review Roundtable will quickly and efficiently review plans, provide feedback and answer compliance questions during a live virtual meeting. A 45-minute roundtable meeting will be held on Mondays with the ADU project’s design professional, the Department of Building Inspection (DBI), the Planning Department, SF Fire, Public Works and the Public Utilities Commission. Both the adaptive re-use guidelines and the relaunch of the ADU round table process are continued evidence of the hard work behind the scenes by City staff to improve their partnership with the development community.

 

Authored by Reuben, Junius & Rose, LLP Manager, Post Entitlement Division Gillian Allen.

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.

Fee Waiver Possible for Downtown Conversions

| Thomas P. Tunny
downtown

Mayor Breed and Supervisor Dorsey recently introduced legislation to waive development impact fees and inclusionary housing requirements for downtown office-to-housing conversion projects. For the Mayor it is the latest in a series of new policies she has dubbed the “30 x 30” initiative, designed to bring at least 30,000 residents and students downtown by 2030.

The city’s impact fees and inclusionary housing requirements are the largest source of city-imposed costs on conversion projects. According to some estimates they add between $70,000 to $90,000 per unit in project development cost. The legislation would waive these fees for all commercial-to-residential conversion projects downtown, specifically projects located in any C-3 zoning district or a C-2 zoning district east of or fronting Franklin Street/13th Street and north of Townsend Street. The legislation would apply to new projects and projects that have received Planning approvals or permit sign-off by Planning prior to January 1, 2025, but not yet received issuance of the first construction document. This legislation builds off the waiver of real estate transfer taxes for conversion projects that was enacted in March 2024.

The Mayor first introduced her 30 x 30 initiative in March 2024. The initiative has three components: (1) commercial to residential conversions; (2) 5,000 units of new housing; and (3) a focus on colleges and universities seeking to bring 10,000 students, teachers, and staff downtown.

The office-to-residential component of the initiative aims to convert 5 million square feet of office space to approximately 5,000 units of housing, bringing 10,000 of the 30,000 new residents downtown. Actions towards this goal include:

  • The Commercial-to-Residential Adaptive Reuse Program streamlines permitting by waiving a number of Planning Code requirements for conversion projects. Now scheduled to expire in 2028, the proposed impact fee legislation would extend this streamlining indefinitely.
  • Approved by voters in March 2024, Proposition C waives the real estate transfer tax on up to 5 million square feet of commercial-to-housing conversion projects downtown.
  • The Department of Building Inspection’s Commercial-to-Residential Adaptive Reuse Information Sheet, published in September 2024, clarifies Building and Fire Code requirements and alternative methods of compliance for adaptive reuse projects.
  • In 2025, as authorized by AB 2488, the Office of Economic and Workforce Development will establish a special Financing District for commercial-to-residential conversion projects that would reinvest incremental property tax revenue to offset a significant share of development costs for these projects.

 

Authored by Reuben, Junius & Rose, LLP Partner, Thomas P. Tunny.

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.

2024 State Housing Legislation Preview

| Alex Klein and Melinda Sarjapur
legislation

During its 2024 legislative session, the California State Legislature again passed a variety of laws aimed at increasing housing production.  As this new housing legislation heads to Governor Newsom’s desk to be either vetoed or signed into law, here is a preview of nine housing bills which could soon become law:

Streamlining Laws

  • AB 2243 (Wicks): AB 2011 amendments. This bill would update the Affordable Housing and High Road Jobs Act of 2022 (AB 2011), which allowed for streamlined residential development on parcels abutting commercial corridors where office, retail, or parking are principally permitted uses.  If enacted, this bill would update the Affordable Housing and High Road Jobs Act of 2022 (AB 2011, Cal Gov Code Sec. 65912.100, et. Seq.).  Among other changes, this bill would expand program eligibility to sites up to 100 acres that contain a regional mall; expand the definition of “urban uses” [which must abut 75% of a qualifying site’s perimeter] to include parking lots and public parks surrounded by other urban uses; and revise the definition of “dedicated to industrial use” so that it applies only to sites which currently contain industrial use, were most recently permitted as industrial and occupied with such use within the past three years, or were designated for industrial use in the jurisdiction’s most recent general plan adopted before 2022 (except where residential uses are also principally permitted).  Further, AB 2243 would allow projects within five hundred (500) feet of a freeway, provided they meet certain ventilation and HVAC requirements.
  • AB 1893 (Wicks): Builders Remedy update. This bill would amend what’s known as the Builder’s Remedy: a provision of the Housing Accountability Act (HAA).  As amended, the Builder’s Remedy would generally prohibit local governments that have failed to adopt a compliant Housing Element from disapproving residential projects that provide either one hundred percent (100%) of units affordable to lower-income or moderate-income households; thirteen percent (13%) are affordable to lower-income households; ten percent (10%) are affordable to very-low income households; or seven percent (7%) are affordable to extremely-low income households.  This affordability requirement would not apply to projects with ten (10) or fewer units located on a site smaller than one (1) acre with a minimum density of ten (10) units per acre.  AB 1893 would also set some new site eligibility restrictions; establish maximum and minimum density limits; and allow qualifying developments to use an existing streamlining program such as AB-2011 or SB-423, as well as State Density Bonus Law.  Importantly, projects that are currently seeking Builder’s Remedy relief and filed applications with a local jurisdiction before January 1, 2025 may proceed under the original Builder’s Remedy law.
  • SB 1123 (Caballero): More flexibility for residential subdivisions up to 10 units. This bill would amend the Starter Home Revitalization Act of 2021 (Cal. Gov. Code Sec. 65852.28 & 66499.41), which allows ministerial approval for subdivisions with ten (10) or fewer units on parcels of five (5) acres or less, zoned for multifamily residential use, and surrounded by qualified urban uses.  Among other changes, this bill would extend the Act to vacant sites up to 1.5 acres that are zoned for single-family housing.  It would also provide that ADUs and JADUs (if permitted) would not count toward the 10-unit maximum.  If signed into law, these changes would become effective as of July 1, 2025.

Development Fees

  • SB 937 (Weiner): Delaying payment of certain development fees. This bill would amend the Mitigation Fee Act (Cal. Gov. Code 66007, et. seq.).  Among other changes, it would delay assessment of development impact fees on certain housing developments until issuance of a first certificate of occupancy or first temporary certificate of occupancy.  Further, it would limit the amount of utility service fees that can be collected at the time an application is received for a residential project to costs incurred by the utility related to the connection.
  • AB 1820 (Schiavo): Fee estimates for residential development. This bill would allow residential developers to request that a local agency provide a preliminary fee and exaction estimate at the time an SB 330 preliminary application is submitted. If requested, the local agency would be required to provide the estimate within thirty (30) business days.  Within thirty (30) business days of final project approval, the local agency would also be required to provide an itemized list and good faith estimate of all applicable fees and extractions.
  • SB 1210 (Skinner): Greater transparency for utility fees and timeframes. This bill would require certain publicly-owned utilities to post the following information on their websites by January 1, 2026: (1) a schedule of fee estimates for typical service connection fees; and (2) estimated timeframes for completing typical service connections for a variety of residential developments including ADUs, single-family homes, multifamily, and mixed-use developments.

Entitlement and Permit Extensions

  • AB 2729 (Patterson): Entitlement extension for certain projects. This bill would extend entitlements for housing developments that were issued prior to and in effect on or before January 1, 2024, and that are set to expire before December 31, 2025, by eighteen (18) months.  AB 2729 would apply to a broad range of entitlements including legislative approvals; administrative approvals; ministerial approvals; and building permits, but would not apply to development agreements, SB-330 preliminary housing applications, or tentative maps that have already been approved for at least twenty-four (24) months under the Government Code.  The area of qualifying housing development projects must be at least two-thirds residential.
  •  AB 2117 (Patterson): Tolling expiration dates. This bill would toll the expiration of certain local entitlements during the time when an action challenging them is pending.  AB 2117 tolling would apply to approvals including variances, conditional use permits, and any other development permits, but not to building permits issued under state or local code, demolition permits, minor or standard excavation and grading permits, or other nondiscretionary permits required post-entitlement prior to construction.

ADUs

  • SB 1211 (Skinner): Expanding state ADU law. This bill would increase the number of detached ADUs eligible for a ministerial approval on a lot that has an existing multifamily dwelling from two (2) detached ADUs to no more than eight (8) detached ADUs, provided that the number of ADUs does not exceed the number of existing dwelling units on the lot.  It would also prohibit local agencies from imposing objective development or design standards that are not authorized by state law on ADUs subject to ministerial approval, or from requiring the replacement of parking spaces if uncovered parking is eliminated to construct an ADU.

The Governor has until September 30, 2024, to either sign or veto legislation passed during the California State Legislature’s 2024 legislative session.

 

Authored by Reuben, Junius & Rose, LLP Attorney, Alex Klein, and Partner, Melinda Sarjapur.

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.

HCD Reverses Course: No Zoning Amendments for Builder’s Remedy Projects

| Chloe Angelis
HCD

Back in May, we wrote about a March 28, 2024, Department of Housing and Community Development (“HCD”) Letter of Technical Assistance to the City of Compton, which determined that the Builder’s Remedy does not prohibit a city or county from requiring Builder’s Remedy projects to obtain zoning or general plan amendment approvals.[1]  Since then, HCD has issued a Letter of Technical Assistance and a subsequent Notice of Violation[2] to the City of Beverly Hills, walking back that March determination and confirming that a Builder’s Remedy project cannot be denied based on inconsistency with a jurisdiction’s zoning ordinance or general plan land use designation.

The Builder’s Remedy, which is part of the Housing Accountability Act (“HAA”), allows developments that meet certain affordability thresholds to bypass local zoning when a city or county is out of compliance with housing element requirements.

In the March letter to the City of Compton, HCD wrote that “the Builder’s Remedy does not expressly prevent the City from requiring discretionary permits and/or legislative actions (e.g., GPAs, Zoning Changes, CUPs, specific plan amendments, etc.) that would be required for similar projects where the Builder’s Remedy does not apply.”  While the March letter focuses on a general plan amendment and zoning change intended “to remedy the inconsistencies between the project and applicable regulatory documents that will result when the project is approved,” the determination cuts to the core of the Builder’s Remedy, which is meant to provide a path for qualifying projects to completely bypass local zoning.

Thankfully, the latest pair of HCD letters to the City of Beverly Hills reverses course.  At issue in these letters is a 165-unit project with 20% low-income units.  The applicant had appealed an incompleteness letter, in which the City instructed the applicant to pursue a general plan amendment and zoning change.  Pending the City Council’s decision on the appeal, the applicant sought direction from HCD on whether a general plan amendment and zoning change could legally be required under the HAA.

The June 26, 2024, Letter of Technical Assistance acknowledges the earlier City of Compton Letter and walks back the March conclusion, explaining that a requirement to pursue a general plan and/or zoning amendment is, in fact, a violation of the HAA:

“While it remains true that the statutory language in the HAA does not expressly prevent the City from requesting or requiring legislative actions (e.g., a GPA/ZC) that would be required for similar projects where the Builder’s Remedy does not apply, requiring such action where the Builder’s Remedy does apply leads to an absurd outcome . . .

The HAA is clear that a project protected by the Builder’s Remedy may not be disapproved for inconsistency with a jurisdiction’s general plan and zoning ordinance.  Accordingly, a jurisdiction that refuses to process or approve a project subject to the Builder’s Remedy due to the applicant’s refusal to submit a GPA/ZC requested or required by the jurisdiction to resolve such an inconsistency violates the intent of the HAA.

. . . In other words, the requirement for a GPA/ZC is essentially a requirement for consistency, and disapproving the project for failure to resolve that inconsistency is effectively a disapproval on the grounds of inconsistency.  The HAA prohibits such a disapproval.”

Following the June letter, HCD issued a Notice of Violation after the Beverly Hills City Council ignored HCD’s prior guidance and denied the applicant’s appeal of the City’s incompleteness letter, based on a finding that a general plan amendment and zoning change are required for the application to be deemed complete.

HCD confirms in the Notice of Violation that, irrespective of the HAA, the Permit Streamlining Act prohibits a city from determining that an application is incomplete on the basis that it does not include an item (in this case, a general plan amendment and zoning change application) that was not included in the submittal requirement checklist.

The Notice of Violation also offers two important reminders about processing preliminary development applications (pursuant to Government Code section 65941.1) and the rights provided by a vested preliminary development application:

(1) The 90-day deadline that an applicant has to respond to a notice of incompleteness resets each time a city issues a notice of incompleteness, such that a project with multiple incompleteness letters and responses could have multiple 90-day response periods without losing the vested right of a preliminary development application.

(2) A vested preliminary development application remains vested unless the number of units or the square footage changes by at least 20%. Other project changes do not affect the rights conferred by a vested preliminary development application.

[1] HCD RE: 1601 W. El Segundo Blvd., Compton – Letter of Technical Assistance (March 28, 2024); available at https://www.hcd.ca.gov/sites/default/files/docs/planning-and-community/HAU/compton-hau604-ta-03282024.pdf.

[2] HCD RE: 125-129 Linden Drive, Beverly Hills – Notice of Violation (August 22, 2024) and HCD RE: 125-129 Linden Drive, Beverly Hills – Letter of Support and Technical Assistance (June 26, 2024); both available at https://www.hcd.ca.gov/sites/default/files/docs/planning-and-community/HAU/beverly-hills-hau-1071-nov-082224.pdf.

 

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

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.

Palo Alto Adopts Bold Upzoning

| Alex Klein
rezoning

Palo Alto recently reached a new housing milestone. On November 13, Palo Alto’s City Council adopted a legislative package implementing rezonings originally proposed in the City’s still uncertified sixth cycle Housing Element. In addition to increasing density and height limits on specific parcels across Palo Alto, this rezoning effort will unlock multi-family residential development on certain properties zoned for industrial or commercial uses.

The City Council’s action comes after a year marked by Palo Alto’s inability to adopt a compliant Housing Element. After missing its state mandated January 2023 deadline, Palo Alto adopted a Housing Element in March. But HCD, the state agency tasked with ensuring local compliance with Housing Element Law, rejected the City’s March Housing Element forcing City planners to go back to the drawing board. A second round of Housing Element legislation passed in May but to little avail. During its review process, HCD again refused to certify Palo Alto’s Housing Element. In a letter sent to the City’s Planning Department in early August, HCD requested Palo Alto make various modifications before it would certify the City’s Housing Element, citing concerns that the City’s site inventory was insufficient. Consequently, as of the time of this publication, Palo Alto’s Housing Element is out of compliance with state law and the City may be vulnerable to further Builder’s Remedy projects. With the adoption of this legislative package, the Palo Alto City Council seeks to appease HCD in the hope that the agency will finally certify the City’s Housing Element.

In addition to modest upzoning across the city, the enacted legislation focuses on rezoning parcels identified as housing opportunity sites in the City’s Housing Element. These identified opportunity sites are primarily clustered around a handful of the City’s major transit corridors, including properties along the west side of El Camino Real between Page Mill and Matadero Avenue (the “El Camino Real Focus Area”), commercial and industrial properties near San Antonio Road and Fabian Way (the “GM/ROLM Focus Area”), and certain sites owned by Stanford University along El Camino Real and Pasteur Drive. These changes come as affected property owners and lessees along El Camino Real have expressed increasing interest in redeveloping their properties to accommodate new housing.

Under the adopted rezoning package, opportunity sites identified in the City’s Housing Element will be rezoned to allow multi-family housing as a permitted use and will enjoy higher density and height limits compared to base zoning. The upshot is that industrially zoned properties located in the GM/ROLM Focus Area will allow multi-family housing as a permitted use, maximum height increases, and FAR maximum increases from 0.5 to 2.5 within the focus area and 1.5 on other opportunity sites. Because these densities would represent the “base” density, developers could leverage the rezoning and use the State Density Bonus Law to construct even taller and denser buildings. Properties located in the GM/ROLM Focus Area will also enjoy modified development standards, including a relaxed landscape coverage standard, reduced parking requirements, and taller height limits further easing constraints on development and leading to more housing in Palo Alto.

Sites identified as part of the City’s El Camino Real Focus Area will also enjoy higher densities, height limits, and lot coverage maximums. But, in response to local concerns, these projects will also face new headwinds. Residential development on these properties will be subject to architectural review to meet either objective design standards or context-based design criteria and would be required to provide 20% below-market rate housing at 80% AMI, an increase from the City’s typical requirement of 15%.

Finally, responding to demands from Stanford University, Palo Alto’s City Council also adopted higher density zoning regulations for university owned properties along El Camino Real and Sand Hill Road. Even though Palo Alto will count housing built on Stanford campus toward its RHNA, the university intends to develop these parcels with subsidized housing for graduate students, faculty, and other Stanford employees.

Beyond the focus areas identified as part of the Housing Element update, however, the rezoning also relaxes design and development standards for certain exclusively residential projects intended to accommodate lower income households across the City. Palo Alto’s recent rezoning legislation presents opportunities across Palo Alto to develop more residential housing in one of the most expensive communities in the Bay Area.

 

Authored by Reuben, Junius & Rose, LLP Attorney Alex Klein.

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.

Increased State Density Bonus Available Next Year

| Sabrina Eshaghi

As we’ve previously covered, Governor Gavin Newsom signed a substantial amount of housing bills into law this year. Two of the most notable pieces of legislation will significantly increase the state density bonus permitted under state law and will make noteworthy changes to SB 35. Below is a more in-depth look at the amendments to the State Density Bonus Law as well as an overview of the potential impacts of the amendments to SB 35 in San Francisco.

AB 1287 – State Density Bonus Law

Beginning on January 1, 2024, AB 1287 will allow an additional 20% to 50% density bonus on top of the existing maximum bonus for projects that provide additional affordable housing units. Currently, the maximum density bonus allowed under the State Density Bonus Law is 50%, which can be accomplished by providing 15% very low income, 24% low income, or 44% moderate income units. The new amendments will allow projects that qualify for a 50% bonus under the current law to provide additional very low income or moderate income affordable housing units in exchange for an additional density bonus based on the sliding scale shown below. For example, a project that provides an additional 5% very low income units, for a total of 20% very low income units, would be subject to an additional 20% bonus, for a total bonus of 70%.

The only limit placed on projects that utilize this additional density bonus is that no more than 50% of the total units can be restricted as affordable.

The amendments also allow up to four concessions for projects that include a total of at least 16% of the units for very low-income households or at least 45% for moderate income households in for sale developments.

The bill also makes some tweaks to the requirements for 100% affordable housing projects that are proposed under the State Density Bonus law.

SB 35’s Future in San Francisco

SB 35 is a state law that offers streamlined ministerial approval for projects in cities that haven’t met their Regional Housing Need Allocation (RHNA) goals in exchange for providing affordable housing and agreeing to certain labor requirements. SB 423, which will take effect on January 1, 2024, includes a number of amendments to SB 35, as discussed in detail here.

San Francisco is currently falling short of meeting its RHNA goals for low income housing, but not above moderate income housing. So, in order to qualify for SB 35, a project in San Francisco must provide at least 50% of its units (not including units granted via a density bonus) to low-income households.

However, due to the increase in the state’s housing production goals allocated to San Francisco for the current RHNA cycle (2023-2031), it is anticipated that the City will not meet its goals for above-moderate housing in the next reporting period. If the California Department of Housing and Community Development makes that determination next summer, then a rental project will qualify for SB 35 streamlining by providing 10% of its units as affordable to very low income households or 20% of its units to low income households. An ownership project can qualify by providing 10% of its units as affordable to low income households.

SB 35 allows for ministerial approval, meaning it eliminates environmental review under CEQA and discretionary entitlements from the Planning Commission. It also imposes a maximum 6-month time frame for approval of planning entitlements. If San Francisco becomes a “10% jurisdiction,” it could unlock the ability to pursue projects that are otherwise cost-prohibitive due to long processing and approval timelines.

Together, SB 35 and the new additional density bonus could significantly spur housing development in San Francisco next year.

 

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

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.

 

2023 Housing Legislation Round-Up

| Justin A. Zucker
legislation

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.

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.