rental

Condo Owners Exempt from HOA Rental Prohibitions Adopted After Purchase, Court Rules

| Michael Corbett

The 4th District Court of Appeals has resolved an ambiguity in the intent and enforceability of Civil Code Section 4740, a statute within the Davis-Stirling Act (“Act”) placing limitations on rental prohibitions within common interest developments (“CID”) in California. The court’s ruling is a victory for owners of residential condominiums currently renting units in a manner that their homeowners association (“HOA”) seeks to prohibit through proposed changes to the CC&Rs, bylaws, rules, or related documents (collectively, the “Governing Documents”) of the HOA. In Brown v. Montage at Mission Hills, Inc. (21 C.D.O.S. 8590), certified for publication on August 20, 2021, the court held that, pursuant to Section 4740(a), an HOA’s amendment to its Governing Documents prohibiting short-term rentals of less than 30 days (“STRs”) was unenforceable against an owner that had been using her unit for STRs the previous 16 years. Civil Code section 4740(a) states that an owner of a property in a CID shall not be subject to a provision in its regulations “that prohibits the rental or leasing of any of the separate interests in that common interest development” un­less that provision “was effective prior to the date the owner acquired title to their separate interest.” The trial court agreed with the HOA that Section 4740 precluded CIDs from imposing complete bans on renting, and that its prohibition on STRs was merely a restriction on rent­ing. The Court of Appeal reversed that ruling, finding the meaning of section 4740 to be unclear, ambiguous, and in need of closer scrutiny. The ambiguity lied in two reasonable, but conflicting, interpretations of the statute’s meaning: on the one hand, if a regulation forbids a specific category of rentals, such as STRs, that regulation “prohibits” that type of rental, even if it does not prohibit all forms of rentals; on the other hand, Section 4740(a) could be read to forbid only outright “prohibitions” on leasing, but not “restrictions” on leasing that fall short of a complete ban on all leasing. To resolve these conflicting interpretations, the court considered both the legislative history of Section 4740, as well as other provisions within the Act’s statutory scheme that imposed restrictions and/or prohibitions of certain actions or conduct. While the court acknowledged that some statutes within the Act expressly created distinctions between “restrictions” and “prohibitions”, it also found that the legislative history of section 4740 indicated that the Legislature intended broad protection for owners against restrictions on renting, includ­ing restrictions against STRs. Further, the legislative history indicated that the Legisla­ture’s intention was to ensure that unit owners within CIDs maintained all of the rental rights they had at the time they purchased their unit. In seeking guidance from both the entire statutory scheme of the Act and the legislative intent behind Section 4740, the court was required to “choose the construction that comports most closely with the Legislature’s apparent intent.” (Smith v. Superior Court (2006) 39 Cal.4th 77, 88) With this directive, the court determined the goal of Section 4740 is to exempt CID unit owners from any kind of rental prohibition or restric­tion that did not exist when the owner acquired title to the unit. Notably, the court cited the opinion of the Legislative Counsel regarding section 4740’s effect on rental prohibitions in CIDs, including prohibitions against STRs, at the time of the statute’s enactment in 2012. The Legislative Counsel opined that a unit owner within a CID is subject to a provision of, or amendment to, Governing Documents that prohibits an owner from renting out their unit only if either (1) the prohibition took effect before the owner acquired title to his or her separate interest in that CID, or (2) the owner consented to the Governing Documents or amendment con­taining that provision. In Brown, HOA respondent Montage nonetheless argued its STR prohibition was permissible due to “public policy considerations.” Montage observed that individual property owner’s rights must some­times give way to the public interest and the right of CIDs to decide their rules and restrictions. However, relying on the public policy considerations given priority by the Legislature when it adopted Section 4740, the court found the statute to have been enacted to protect “the rights of CID own­ers to rent or lease their properties, as the rights existed at the time they acquired them,” and that its goal was to ensure that “the right of an owner to rent or lease his or her separate interest [in a CID] shall be the same as when the owner purchased his or her separate interest throughout the life of ownership.” (Sen. Com. on Judiciary, Analysis of Sen. Bill No. 150 (2011-2012 Reg. Sess.) as amended Apr. 25, 2011.) (Italics added.) In other words, a residential condominium owner will not be subject to amendments to Governing Documents prohibiting a specific form of leasing – including without limitation STRs – otherwise allowed at the time such owner first purchased their unit. An owner who acquired title prior to the HOA’s adoption of such a rental prohibition would be exempt from the same unless the owner waived this right by formally voting in favor of the proposed prohibition. The Brown appeal was pending while the Legislature enacted Civil Code Section 4741, a statute that was the subject of an e-update by this firm earlier in the year.  Section 4741 allows an HOA to adopt and enforce a provision in its Governing Documents that prohibits transient or STRs of units within its CID for a period of 30 days or less. (Civ. Code, § 4741, subd. (c)). However, as pointed out by the Brown ruling, Section 4741 expressly provides that, in ac­cordance with Section 4740, Section 4741 does not change the right of an owner of a separate interest who acquired title to their separate interest before the effective date of this section to rent or lease their property. (Civ. Code, § 4741, subd. (h)).   Authored by Reuben, Junius & Rose, LLP Attorney Michael Corbett. The issues discussed in this update are not intended to be

Bill

Eliminating Single Family Zoning is OK, but Don’t Eliminate Parking

| Matthew Visick

SB 9 Makes it Through the Assembly but AB 1401 Dies in the Senate Two bills that would limit local control over housing issues met very different fates this past Thursday in the California Legislature.  Both were vehemently opposed by cities and groups that favor local control over land use decision making.  One was opposed by housing equity groups. Senate Bill 9 Senate Bill 9 (“SB 9”) would, among other things, require a city or county to ministerially approve (1) a two-unit housing project in a single-family zone, (2) the subdivision of a parcel zoned for residential use into two parcels, or (3) both. SB 9 could unlock substantial housing production in single-family neighborhoods, where opposition to multi-family housing projects is typically greatest.  Many of the lots in these districts include only a single-family home and maybe an Accessory Dwelling Unit (which cannot be separately sold).  SB 9 would allow each existing single-family lot to be ministerially subdivided into two lots, and require ministerial approval of a duplex on each of the lots. According to the Terner Center for Housing Innovation at UC Berkeley, SB 9 has the potential to allow for the development of nearly 6 million new housing units statewide. Assembly Bill 1401 Assembly Bill 1401 (“AB 1401”) would limit minimum off-street parking requirements for projects located near a “major transit stop” (generally a train station or bus station with high frequency headways). AB 1401 is hardly radical legislation.  When first introduced by Assembly Member Friedman in February 2021, the bill prohibited public entities (cities and counties) from imposing or enforcing minimum parking requirements on residential, commercial, or other development that is located within one-half mile walking distance of a “major transit stop” (generally a rail stop or a bus stop with frequent headways).  As last amended on July 5, 2021, the bill eased the prohibition for smaller cities.  A city with a population of 75,000 or more that is located in a county with a population of less than 600,000 was only prohibited from imposing the parking minimums on projects located within one-quarter mile of a major transit stop, and a city with a population of less than 75,000 was not subject to any prohibition. Studies show that eliminating minimum parking requirements for projects located near transit routes supports the state’s housing goals by reducing the cost to deliver housing and allowing more dwelling units on a development site.  Eliminating parking requirements near transit also advances the state’s environmental goals by reducing emissions from cars. Wait, the Parking Bill is the One That Died? Both SB 9 and AB 1401 sailed through their respective policy committees in both the Assembly and the Senate with large vote margins in support.  Both were vehemently opposed throughout by local governments and groups that advocate for “local control” over land use decision making.  Yet AB 1401 was referred to the “suspense file” in the Appropriations Committee, where ambitious legislation often goes to die, while SB 9 was not. It is hard to know exactly why bills are referred to the “suspense file.”  The “suspense file” is intended to be a place to evaluate whether to advance a bill that could have a significant fiscal impact.  But committee analyses of both SB 9 and AB 1401 show that both bills were anticipated to have the same annual impact on the budget (SB 9: $89,000 and AB 1401: $97,000). A more plausible explanation emerges when one considers the groups opposed to the changes the bills would bring.  It is not surprising that numerous suburban cities and local government groups opposed both bills (SB 9 faced even greater opposition from these groups than AB 1401).  However, the opposition to AB 1401 was more diverse.  Affordable housing advocates argued that eliminating parking minimums for market rate development would reduce incentives for developers to create the affordable dwelling units required to reduce parking requirements using the Density Bonus Law.  In addition, environmental groups objected to the reduction of parking near transit as inconsistent with equity goals. Decline in Value Real Estate Tax Appeals Due September 15 The deadline to appeal the valuation of property for real estate tax purposes is September 15 for both San Francisco and Alameda Counties.  Such an appeal would be appropriate due to a decline in property value because of the impact of Covid-19 and the related business shutdowns.  If you need more information, please contact Kevin Rose at krose@reubenlaw.com (415.567.9000).  Other counties may have different deadlines, so you should check with your local County appeals board to confirm the deadlines.   Authored by Reuben, Junius & Rose, LLP Attorney Matthew Visick. 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.

non-potable

Legislation Seeks Water Conservation in New Buildings

| Justin A. Zucker

To conserve water in the midst of another extreme drought, Supervisors Rafael Mandelman (District 8), Gordon Mar (District 4), and Myrna Melgar (District 7) proposed legislation (“Legislation”) to strengthen the 2012 Non-potable Water Ordinance (Article 12C of the San Francisco Health Code). The Legislation’s goal is to preserve the City’s water supply by requiring the use of non-potable water, which is water not suitable for drinking, for other productive uses such as toilet flushing, irrigation, decorative fountains, dust control and cooling applications. Across the nation, non-potable water is used to reduce pressure on natural water resources, and the use of onsite non-potable water may also reduce flows into the sewer, reducing strain on the City’s sewer system. Effective since 2015, most new projects of 40,000 square feet or more are required to utilize the San Francisco Public Utilities Commission’s (“SFPUC”) Water Budget Calculator to assess the available supply of onsite alternate water sources and determine the demand for toilet and urinal flushing and irrigation. Large new projects of 250,000 square feet or more of gross floor area are required to construct, operate, and maintain an onsite non-potable water system to treat and reuse the identified available sources of rainwater, graywater, and foundation drainage to meet the planned demand for non-potable water uses. In the Legislation introduced on June 29, 2021, the threshold for new projects that must construct, operate, and maintain an onsite non-potable system to treat and reuse available sources of water is reduced to 100,000 gross square feet for projects receiving a site permit after January 1, 2022. The systems required and sources of water to be used are also expanded and will be determined based on building type. For commercial buildings, most available sources, such as rainwater, graywater, blackwater, and foundation drainage, must be used if needed to satisfy as much toilet and urinal flushing and irrigation as possible. For systems providing water to residential and mixed-use projects, available sources of rainwater, greywater, and foundation drainage must be used for toilets, irrigation, and other end uses like clothes washing. In analyzing the Legislation’s impact on pipeline projects, SFPUC staff determined that the lower threshold would result in a 20,000 gallons per day of potable water savings. This represents just 2% of the total savings anticipated by the Legislation. However, the cost burdens are not linear. For example, the SFPUC’s analysis found that the cost of a graywater system would only be 15% less for a 100,000 square foot building than a 250,000 square foot building. The SFPUC found that there is not sufficient data at this time to say conclusively whether the Legislation would be a net benefit or cost to smaller buildings. Additional cost-benefit analysis by SFPUC staff is expect before the next hearing. Appreciating the costs for installation of onsite water reuse systems, the SFPUC has in place an Onsite Water Reuse Grant Program to encourage water users to voluntarily reduce SFPUC water supply usage through use of alternate water sources for non-potable application. To incentivize building owners to install alternate water source systems, SFPUC recently lowered the threshold of eligibility for the grant program. The Legislation has been continued to the call of the Board of Supervisors’ chair and no hearing date has been set for consideration by the Board of Supervisors Public Safety and Neighborhood Services Committee. We will continue to monitor and keep readers updated.   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.

Electronic Plan Review

Reinstatement of Electronic Plan Review

| Gillian Allen

Electronic Plan Review The San Francisco Department of Building Inspection has reinstated Electronic Plan Review (EPR) for any new in-house review projects. This process saves applicants time and money on their project. Saves Money – No need to print multiple large rolls of paper plans and coordinate multiple design professional wet signatures. Digital signature over stamp accepted. Increases Transparency – All project information, comments, revisions, and approvals are captured, aggregated, and logged in one location, accessible online 24/7 through the designated Bluebeam session. Saves Time – With the project plans online, plan checkers can conduct some reviews simultaneously, and any revisions can be uploaded directly into the Bluebeam session by the respondent rather than in person rechecks and paper submittals. The EPR option is not currently available to any projects that were submitted in paper and currently under review. It is only for new applications. It also does not apply to over-the-counter permits. There are several formatting requirements, and the Building Department is offering a training session which you can register for below: 2pm–4pm, Wednesday, August 24, 2021: Register here More information is available on the DBI website through the links below: In-House Review Step-by-Step Guide Electronic Plan Review (EPR) Resource Page   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.

shared spaces

San Francisco Shared Spaces Program Permanent

| Sabrina Eshaghi

Mayor London Breed recently signed legislation that will make the Shared Spaces Program a permanent feature in San Francisco. The temporary Shared Spaces Program allowed more flexible use of sidewalks, streets, and other public spaces for neighborhood businesses and was implemented through a mayoral proclamation tied to the declaration of a state of emergency due to COVID-19. According to the Mayor’s Office, more than 2,100 curbside and sidewalk Shared Spaces permits have been issued by the City since June 2020. Given the success of the program, the Mayor proposed legislation to make the program permanent in March of this year. Due to the number of City agencies involved and the complex issues this legislation raises, it took months of debate and countless amendments to ultimately gain unanimous approval by the Board of Supervisors and the Mayor’s signature. The permanent legislation will continue to allow the same types of shared spaces that have been permitted under the temporary program, including on sidewalks, curbside lanes, and roadways, but with an updated approval process and a new set of operating requirements that are meant to address some concerns with the existing program. The permits will be available for commercial and noncommercial activities, including retail uses, cultural events, arts activities, general recreation, and entertainment uses. Generally, the permits will allow the temporary and reversible installation of physical improvements. Approval Process All permits will be routed through the Planning Department to the appropriate agency with authority to approve the permit. Depending on the type of permit and the specific uses proposed, the agencies with jurisdiction over the permit will include the Department of Public Works, Interdepartmental Staff Committee on Traffic and Transportation (ISCOTT), Municipal Transportation Agency Board of Directors (SFMTA Board of Directors), Entertainment Commission, and/or Real Estate Division. Additional coordination or approval by other agencies may also be required. According to the Mayor’s Office, the City will require streamlined approval of the permits within 30 days of submittal of the application, in alignment with the requirements of Proposition H, which was passed by the voters in November 2020 (discussed in a previous update). The curbside and sidewalk permits will be effective for up to one year and can be renewed annually. Roadway permits will have a maximum initial term of two years and can be renewed for up to two years at a time. Any person can appeal the decision to approve or deny a Shared Spaces permit. The permits will generally be subject to fees, except small businesses may be eligible for reduced fees in certain circumstances. Conversion of Existing Permits Given the significant number of existing Shared Spaces permits, the legislation allows existing Shared Spaces to continue operating based on the terms of the specific permit. Prior to the expiration of the existing permit, the permittee can apply to convert to a new Shared Spaces permit based on the requirements of the legislation. Existing permitholders that apply for new curbside permits will be eligible for fee waivers and deferrals. However, the fee waiver and deferral will not apply to formula retail uses. Enforcement The 311 system will be utilized to receive complaints, route them to the appropriate agency, and provide complainants updates on the status of the complaint including how the issue was abated or why the complaint was closed. In addition, at least every other month, the City will be required to conduct rolling audits of Shared Spaces in commercial corridors to confirm compliance and take any necessary enforcement actions. Accessibility Accessibility was a major topic of discussion during the legislative process. Ultimately, the legislation requires each agency to provide regulations that account for disability and access needs. In addition, sidewalk permits will generally be required to provide an 8-foot wide unimpeded path of travel. In terms of public accessibility, the legislation limits the number of restricted access events to eight single-day events per year. Parklets in curbside lanes or any other permit that exclusively allows private dining will be required to provide one public bench or another type of seating arrangement that will be accessible to non-patrons for every 20 feet of Shared Space. Although there was some discussion about leaving the parklets open after business hours, the final legislation allows permittees to secure curbside Shared Spaces from midnight to 7am. Outreach and Notice Requirements As part of the initial application, the legislation requires documentation of community outreach and support as well as documentation showing that all property owners of any building fronting a proposed sidewalk or curbside Shared Space have been notified of the application. The legislation also mandates a public notice and comment period following submittal of applications for sidewalk and curbside permits. Annual Reporting The Board of Supervisors included requirements for a number of annual reports regarding various issues related to the Shared Spaces Program, including: Revocations of permits in order to comply with the City’s Vision Zero, Better Streets, and Transit First Policies, including for purposes of restoring transit lines, to maintain safe access to public rights of way for seniors and people with disabilities, and to facilitate pedestrian safety; Opportunity sites for sidewalk extensions on blocks with many sidewalk or curbside Shared Spaces and commercial or mixed-use corridors with narrow sidewalks; Impacts on small businesses without Shared Spaces permits, including businesses that rely on consumer vehicle loading and unloading, and recommendations for how to mitigate any negative impact of the Shared Spaces Program on those businesses; and Impacts on street cleaning operations and recommendations for how to accommodate any decrease in such services. We may continue to see the Shared Spaces Program evolve based on the recommendations and findings of these reports.   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

SUD

Planning Commission Considers Two New Pieces of Legislation

| Thomas P. Tunny

The Planning Commission considered two pieces of proposed legislation at its regular meeting last week.  One was the elimination of the Life Science and Medical Special Use District (to which staff added a proposal to eliminate the Industrial Protection Zone (IPZ) Special Use District), and the second was Supervisor Mandelman’s so-called “Large Residence” legislation (which we have discussed in a previous update). Life Science and Medical and IPZ Special Use Districts The Life Science and Medical Special Use District (SUD) is generally bounded by Mariposa Street to the north, 3rd Street to the east, 23rd Street to the south, and Iowa Street to the west. The SUD was adopted as part of the Central Waterfront Plan in 2009, and was established in the northern part of the Plan Area to support the creation and expansion of life science and medical uses, given the proximity to the UCSF campus at Mission Bay. The Dogpatch Historic District and Neighborhood Commercial District are generally excluded from the boundaries of the SUD. Almost all parcels in the SUD are classified as Urban Mixed Use (UMU) zoning. The SUD principally permits medical services, life science offices, and life science laboratories. Among other controls facilitating the development of these uses in the SUD, the uses are exempt from PDR replacement requirements. The Planning Department’s broader concern with the loss of PDR uses was one of the reasons driving the elimination of the SUD. The other reasons behind the legislation are the Planning Department’s view that the City has enough supply of life science and laboratory space (including projects at Pier 70, Potrero Power Station, Mission Rock, and in SoMa, Central SoMa, and Mission Bay), and concerns with some of the ambiguities in the Planning Code concerning life science and laboratory uses. These ambiguities have contributed to uncertainty for project sponsors, an increased need for letters of determination, and the departure of businesses. The Department is studying a more comprehensive code update to clarify controls related to laboratory uses. The IPZ SUD consists of a large area in the Bayshore and Bayview neighborhoods now classified as PDR-2. Staff recommended eliminating the IPZ SUD to close what it considered a loophole allowing self-storage, big box retail, and heavy industrial uses in PDR neighborhoods. The Commission voted unanimously to recommend to the Board of Supervisors that both SUD’s be eliminated, with a grandfathering clause for the Life Science and Medical SUD that exempted any projects with submitted applications as of July 22, 2021. Large Residence Legislation As we have reported previously, Supervisor Mandelman’s proposed large residence legislation would discourage residential units over 2,500 square feet by requiring, with some limited exceptions, a conditional use for them in RH zoning districts. Last week, the Planning Commission had a lengthy discussion of the merits of the legislation, before voting to continue the matter until September 23, 2021. Ranging from some support to some pointed concerns, here are the highlights of the discussion: There was some consensus that the legislation, while perhaps identifying a problem for Supervisor Mandelman’s District 8, was not appropriate as a City-wide control where other areas might not have the same issues. More than one Commissioner questioned the 2,500 square-foot number, calling it arbitrary. The Commissioners discussed FAR as a more accurate measure, but identified concerns with that approach as well. At least one Commissioner questioned the lack of data concerning how many projects this was designed to address, and the lack of research supporting the legislation generally. One Commissioner questioned the wisdom of telling homeowners how big their bedrooms and other rooms should be, and how many bedrooms they should have. Commissioners also expressed some support for the intent of the legislation, due to ongoing concerns with the lack of affordable and moderately-priced housing. One Commissioner suggested that the proposed controls should not be enforced as a conditional use authorization, but rather as legislated Planning Code controls, from which property owners could seek variances. Following the discussion, the Commissioners agreed there were too many unresolved issues and voted to continue the matter until September 23, 2021.  They wanted to consider it at the same time as Supervisor’s Mandelman’s proposed “fourplex” legislation for corner lots in RH districts (which we have discussed in a previous update). The Commission also discussed possibly delaying the legislation so it could be considered with the planned Housing Element update.   Authored by Reuben, Junius & Rose, LLP Attorney 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.

PSA's

Appellate Court Clarifies Permit Streamlining Act’s Noticing Requirements

| Mark Loper

On the heels of the Berkeley Shellmound SB 35 decision in favor of streamlined housing, another recent Court of Appeal decision rejected a public agency’s attempts to delay a housing project under the Permit Streamlining Act (“PSA”), and clarified that a jurisdiction with permitting authority must take action within the PSA’s time limits even if the project’s public hearing notice did not specifically discuss the PSA’s “deemed approved” provision. Overturning a 2006 decision about the level of detail necessary to trigger the PSA’s “deemed approved” requirement when a City fails to render a decision on a project within a specified time period, the Court of Appeal in late June determined that a public agency’s hearing notice did not need to specifically include a reference to the deemed approved outcome (Linovitz Capo Shores LLC et al v. California Coastal Commission, No. G058331 (Cal. Ct. App. June 25, 2021)). Instead, the Court found that the California Coastal Commission (“Coastal Commission”) failed to properly make a decision on the merits of a mobilehome housing project within the PSA’s time limits, and under the PSA the project was approved. While the fact pattern for the case is somewhat unique, it provides a lesson for local and state permitting agencies, and project sponsors dealing with jurisdictions hostile to new housing. Owners of beachfront mobilehomes in San Clemente, Orange County, filed permits with the Coastal Commission and other permitting agencies to renovate their mobilehome park. After several years, the Coastal Commission issued individual public hearing notices for each application. The notice included a project description, the date, time, and location of the hearing, hearing procedures, and ways the public could participate. Notably, the hearing notice did not specify the deadline for the Coastal Commission to render a decision on the permits under the PSA. However, the staff report provided in bold lettering that the Coastal Commission was required to make a decision at the hearing in order to comply with the PSA, and the Commission’s legal counsel discussed the “deemed approved” deadline at the hearing itself. At the project hearing, the sponsors agreed in principle to withdraw and re-file their applications with an amended scope, but asked the Coastal Commission to waive resubmittal fees and a resubmittal waiting period. The Commission waived the waiting period, but not the resubmittal fees, and the meeting recessed without any further comment from the project sponsors. The Commission did not take any formal action on the pending applications. The sponsors then sued the Commission, claiming in part that the projects had been deemed approved under the PSA. Unsurprisingly, the Coastal Commission claimed that the projects were not approved for several reasons. Relevant to the PSA, according to the Commission, the requisite public notice under the PSA was never given. It claimed the hearing notice needed to include a statement that the projects would be “deemed approved” if the Commission did not act within 60 days. The Court of Appeal disagreed, interpreting the PSA to require such a statement only when an applicant itself is providing notice of a hearing under the PSA. When the permitting agency provides notice, the PSA’s time limitations can apply even if the notice does not discuss the PSA. The Court of Appeal’s decision overturns a 2006 decision reaching the opposite conclusion. The Court did not promulgate a list of information that must be included in a public notice to trigger the PSA’s deemed approved deadlines, instead reaching a narrower conclusion that the notice provided in this case—as discussed above—complied with statutory law and constitutional due process principles. Interestingly, the Court noted that even though the Coastal Commission did not have a legal obligation to notify the public of the upcoming PSA deadline, it did just that, both through the project’s staff report and its legal counsel’s advice to the Commission that the PSA deadline was approaching. The Court also went out of its way to note near-unanimous public support for the project, which arguably made its decision easier. Implied in the Court’s opinion is that the Commission made a simple mistake of parliamentary procedure by not taking an official action on the pending applications in front of it. The Court did not opine on whether the Commission could legally keep the hearing open and continue it to a future date past the PSA deadline date, or adopt a motion of intent to disapprove and continue it. Both are common actions taken by permitting authorities that pro-housing activists have long claimed circumvent the intent of the PSA and cause delay to housing projects. Increasingly, California courts are being asked to enforce the pro-housing laws passed in Sacramento in recent years, such as SB 330, the PSA, and SB 35. For example, two trial courts recently rejected anti-housing voter initiatives on the grounds they violated SB 330, either one of which could be appealed and become binding case law. We will continue to keep you up to date on major housing-related legal developments.   Authored by Reuben, Junius & Rose, LLP Attorney 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.

HOA

Proposed State Law Allows Term Limits for HOA Board of Directors

| Jay Drake

A homeowners association (“HOA”) is required to hold elections for its board of directors (“Board”) when a seat becomes available.  The Davis-Stirling Act specifies that HOA elections must conform to certain rules and procedures.  A Board can set qualifications for nominees running for the Board, but there are only a narrow set of reasons why a Board can disqualify a person from serving on the Board.  Reasons for disqualification include failure to pay HOA assessments, circumstances where a member of the individual’s household would be serving concurrently on the Board, and, in certain situations, the individual’s past criminal convictions. Senate Bill 432 currently processing through the California State legislature, if enacted, would add another factor that would disqualify an HOA member from running for the Board:  if an individual has served the maximum number of terms or sequential terms permitted by the HOA.  An HOA is not required to impose term limits for the Board, but if the HOA has term limits, it can enforce them and disqualify a person from running for an additional term. Senate Bill 432 would also make other technical changes to HOA election rules, including requirements for inspectors of elections, Board candidate requirements, requiring an HOA to maintain election materials for one year after the election, and noticing requirements. We will follow Senate Bill 432 as it works its way through the State legislature and provide another update if it is finally passed and enacted.   Authored by Reuben, Junius & Rose, LLP Attorney Jay Drake. 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.

on-site

No Parking? No Problem. Property Owner Not Liable for Failure to Provide On-Site Parking

| Lindsay Petrone

A case recently discussed a property owner’s duty to a third party visitor, more specifically a possible duty to a third party who incurs an off-property injury due to an alleged deficiency at the owner’s property itself.  In Issakhani v. Shadow Glen Homeowners Association, Inc. (“HOA”), the plaintiff tried to park at the property (owned by the HOA) but there was no more guest parking available (and likely too few guest parking spaces to begin with at the property), so she parked across the busy street at an off-site location.  63 Cal.App.5th 917 (2021).  Plaintiff jaywalked to cross the street to get to the property and was hit by a car and suffered severe injuries.  The Court of Appeal ultimately held that the property owner did not have a duty of care to protect the plaintiff from an accident that occurred as she travelled to the premises. The Court analyzed the standards for negligence and duty of care.  Claims for negligence or premises liability for injury at a property rely on the same analysis – was there a duty of care?  Was there a breach of that duty?  If yes to the first two, was such breach the cause of the person’s injuries?  The Court referenced the common law that a property owner does have a duty to maintain the land in its possession and control in a reasonably safe condition as to avoid exposing others to an unreasonable risk of injury.  The Court elaborated that such duty of care can extend to a responsibility to avoid exposing persons to risks of injury that occurs off-site if the landowner’s property is maintained in such a manner as to expose persons to an unreasonable risk of injury off-site. Here, the Court did state that a landowner has a duty of care not to maintain conditions on its property that exacerbated the dangers of invitees entering or exiting the property.  However, they rejected the theory that the absence of adequate on-site parking, by itself, amounted to a condition on the property that exacerbates the off-site danger to invitees and gives rise to an actionable duty.  They found that although there was a foreseeability of harm to the plaintiff with reasonable degree of certainty due to lack of sufficient parking and possible injury when coming to the property, there was not a closeness of connection between the defendant’s conduct and the injury suffered.  More specifically, they found that the plaintiff’s actions – selecting an off-site parking location on the far side of a busy street and then jaywalking – was more a product of plaintiff’s decisions rather than simply a lack of on-site parking at the HOA’s property. In addition to the analysis of common law elements, the Court also relied on a prior case which directly held that a landowner does not have a duty to provide invitees with on-site parking in order to protect from the dangers of crossing nearby streets to get to the property.  Finally, they found that public policy guarded against finding for the plaintiff as a property owner is sometimes limited by a finite amount of parking and cannot necessarily always provide enough on-site parking for guests and invitees. Issakhani reminds us that a landowner should be cognizant of possible unsafe conditions at their property which could expose them to liability.  The Court will analyze whether there was a duty and foreseeability of harm to the third party based on the maintenance of one’s own property and a close connection between the risk and injury suffered.  This could also include liability for injuries off the property if directly caused by an unreasonable risk at one’s own property.  However, this case highlights that one cannot cover each and every contingency and someone’s choice to make a riskier decision (here jaywalking across a busy street) will likely not be held against the property owner.   Authored by Reuben, Junius & Rose, LLP Attorney Lindsay Petrone. 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.

SB 7

SB 7 Renews Expedited CEQA Review for Leadership Projects

| Kaitlin Sheber

Titled the “Jobs and Economic Improvement Through Environmental Leadership Act of 2021,” SB 7 reenacts and revises expedited CEQA administrative and judicial review procedures for certain Environmental Leadership Development Projects (“Leadership Projects”) established by AB 900. The bill was introduced by Senator Atkins as an urgency measure and went into effect on May 20, 2021. Since enactment, large projects are again eligible to be certified as Leadership Projects, and a new category of smaller housing projects may now be certified. Requirements for each type of project are discussed below. Examples of projects certified by the Governor as Leadership Projects in the past include the Apple Campus 2 project in Cupertino, the Golden State Warriors Event Center and Mixed-Use Development project in San Francisco, the Downtown West Mixed-Use Plan in San Jose, the Potrero Power Station project in San Francisco, and the Hollywood Center project in Los Angeles. Once the Governor certifies a project, it must be approved by its lead agency within a certain period of time. By requiring CEQA challenges to Leadership Projects to be resolved in under a year, SB 7 aims to expedite construction for housing projects and boost high-wage employment with the prevailing wage requirements that are a prerequisite for receiving the benefits of SB 7. However, given the increased costs prevailing wage requirements add to projects, developers of smaller housing projects that are unlikely to be challenged in court may not find Leadership Project certification economical. How many smaller residential projects choose to opt in to the program is yet to be seen. Environmental Leadership Development Projects: Only certain development projects qualify to be certified as Leadership Projects. These projects include: Large residential, commercial, retail, sports, entertainment, cultural, or recreational use projects that: Result in at least $100,000,000 in investment Create high-wage and highly skilled jobs that pay prevailing and living wages, provide construction jobs and permanent jobs for Californians, help reduce unemployment, and promote apprenticeship training Are 15% more transportation efficient than comparable projects, i.e. that generate fewer vehicle trips per employee, visitor, or customer Are located on an infill site Are consistent with any local sustainable communities strategy or alternative planning strategy and applicable policies where the California Air Resources Board has accepted the strategy achieves Greenhouse Gas reduction targets Meet other environmental standards, including no net new greenhouse gas emissions with an emphasis on on-site emission reductions Provide unbundled parking for multifamily residential projects Housing development projects that: Would result in an investment between $15,000,000 and $100,000,000 Create high-wage and highly skilled jobs that pay prevailing and living wages, provide construction jobs and permanent jobs for Californians, help reduce unemployment, and promote apprenticeship training Are located on an infill site Are consistent with any local sustainable communities strategy or alternative planning strategy and applicable policies where the California Air Resources Board has accepted the strategy achieves greenhouse gas reduction targets Meet other environmental standards, including no net increase in greenhouse gas emissions Dedicate at least 15% of the project to lower income households or dedicate the percentage required by local government, whichever is higher Do not provide short term rentals Do not include industrial or manufacturing uses Dedicate at least 2/3 of the square footage to residential use Provide unbundled parking for multifamily residential projects Renewable clean energy projects that generate electricity through wind or solar only Qualifying projects must go through a certification process to become Leadership Projects. First, the Governor must determine the project meets each condition as required above. Second, the Governor must submit that determination to the Joint Legislative Budget Committee, along with any supporting information, for review and concurrence or nonconcurrence within 30 days. If there is no concurrence or nonconcurrence from the Joint Legislative Budget Committee within those 30 days, the project will be deemed certified. Typically, the entire process takes 3 to 6 months. Extension of time and new requirements: The following timelines are in effect under SB 7: Leadership Projects must be certified by the Governor before January 1, 2024. Leadership Projects must be approved by the lead agency before January 1, 2025. The provisions of the bill will expire January 1, 2026. Projects certified by the Governor before January 1, 2020 and approved by a lead agency before January 1, 2022 are subject to the former AB 900 requirements in place on January 1, 2020. SB 7 has added requirements that eligible projects use a “skilled and trained” workforce for all construction work and project applicants pay all trial court costs in addition to court of appeal costs associated with hearing and deciding any case. The bill has also authorized the Governor’s Office of Planning and Research (“OPR”) to charge a fee to applicants. Given the additional requirements SB 7 has introduced for Leadership Project certification, it is unclear how feasible or desirable it will be for development projects, especially smaller housing development projects, to obtain Leadership Project certification going forward.   Authored by Reuben, Junius & Rose, LLP Attorney Kaitlin Sheber. 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.

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