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 v. City of Los Angeles to resolve the issue of whether SB 9 superseded local land use authority.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.

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.

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.

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.

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.

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.

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.