Loading...
HomeMy WebLinkAbout1/15/2019 Item 9, Dietrick City of San Luis Obispo, City Attorney’s Office, 990 Palm Street, San Luis Obispo, CA, 93401-3249, 805.781.7140, slocity.org DATE: January 10, 2019 TO: City Council VIA: Derek Johnson, City Manager DJ CC: Michael Codron, Director of Community Development FROM: J. Christine Dietrick, City Attorney SUBJECT: 1/15/19 Council Meeting, Item 9; Mixed Use Project at 790 Foothill Item 9 of the January 15, 2019 City Council agenda is an appeal of the Planning Commission’s approval of a use permit for the proposed mixed-use project at 790 Foothill Boulevard. At this hearing, the City Council will also consider concessions, incentives and waivers of development standards for the proposed project as required by the California Density Bonus Law (“DBL”), Government Code section 65915. In part, the appeal alleges that staff misinterpreted and/or incorrectly analyzed the project with respect to the Housing Accountability Act, Government Code 65589.5 and the DBL. In response to these assertions and given the importance and impact that these laws have on housing projects such as the one proposed at 790 Foothill Boulevard, the City retained Barbara Kautz of the law firm Goldfarb and Lipman, LLP to peer review the City’s staff report and analyze these issues. Ms. Kautz’s memo is attached. Attachment: Memo to San Luis Obispo regarding 790 Foothill Project 1808\05\2506552.2 January 8, 2018 memorandum To Christine Dietrick, City Attorney From Barbara E. Kautz RE 790 Foothill Project The City of San Luis Obispo (the City) has requested that we review the appeal submitted by Foothill Boulevard Civic Defense and the City's staff report and provide our view of whether the City staff report correctly interprets State law in relation to the proposed project at 790 Foothill. Goldfarb & Lipman's practice focuses on housing- related issues, with the majority of our clients either affordable housing developers or public agencies. My colleagues and I have prepared detailed explanations of the new state laws applicable to housing and frequently speak at conferences regarding those laws. We also are currently defending several cities in related litigation. To summarize our conclusions, we agree with the City's interpretation of the Housing Accountability Act (Gov. Code § 65589.5) and state Density Bonus Law (Gov. Code § 659151) as it applies to the proposed project at 790 Foothill. A. Background. In 2016 and 2017, the California State Legislature passed significant legislation amending state Density Bonus Law (the DBL) and the Housing Accountability Act (the HAA), respectively. As stated in the HAA: "The Legislature's intent…was to significantly increase the approval and construction of new housing for all economic segments of California's communities by meaningfully and effectively curbing the capability of local governments to deny, reduce the density for, or render infeasible housing development projects." (§ 65589.5(a)(2)(L); emphasis added.) While in the past it was common for cities and counties to reduce the density of housing projects in response to community concerns such as neighborhood character or view 1 All future references are to the Government Code unless otherwise cited. January 8, 2018 Page 2 1808\05\2506552.2 impacts, cities may no longer use these types of concerns to justify project denial or reduction in project density when a project is consistent with the zoning or qualifies for a density bonus. As intended by the Legislature, the City has limited ability to "deny, reduce the density for, or render infeasible" a housing development such as the one proposed at 790 Foothill. B. Housing Accountability Act. Basic Provisions. The HAA restricts the City's ability to deny, reduce the density of, or make infeasible all housing developments, whether affordable or market rate, and places the burden of proof on the City to justify one of these actions. (§ 65589.6.) It is applicable to charter cities. (§ 65589.5(g).) Under the HAA, if any housing development project – whether market-rate or affordable – complies with all “applicable, objective general plan, zoning, and subdivision standards and criteria, including design review standards,” in effect when the project is deemed complete, but the City disapproves the project or reduces the density, the City must make written findings supported by a preponderance of the evidence that there is a "specific adverse impact upon the public health or safety" that cannot be mitigated. (§ 65589.5(j).)2 As the staff report describes, receipt of a density bonus is not a valid basis to find a project inconsistent. (§ 65589.5(j)(3).) The City must also apply its development standards and policies “to facilitate and accommodate development at the density permitted on the site and proposed by the development” (§ 65589.5(f)(1)) and cannot add a condition that has the effect of reducing the density of a conforming project. (§ 65589.5(j)(4).) Recent Litigation. Although the HAA was adopted in 1982, developers rarely invoked it until recent years. The Court of Appeal upheld its applicability to market-rate projects in 2011 in Honchariw v. County of Stanislaus, 200 Cal. App. 4th 1066. Litigation seems now to be fairly common in Superior Courts, much brought by third-party YIMBY groups on behalf of developers. In cases involving a four-unit project in Berkeley and a 320-unit project in Los Gatos, the Superior Court found that project denials were not based on objective standards, and both cities ultimately approved the projects. We have defended three cities in HAA cases regarding project denials, all brought by YIMBY groups, and are aware of other lawsuits. When litigation challenging a project denial is successful, the plaintiffs are now entitled to attorneys' fees, which may be motivating more litigation. Applicability to 790 Foothill. The City's staff report accurately describes the applicability of the Housing Accountability Act to 790 Foothill. The report states that the project conforms with all objective standards; under State law, the density bonus is 2 The staff report describes this finding in more detail. January 8, 2018 Page 3 1808\05\2506552.2 considered to conform to the City's standards. A conforming project cannot be denied or its density reduced unless the City can find a "specific adverse impact upon the public health or safety." If no "specific adverse impact" can be identified, the City cannot deny the project or reduce its density, as stated in the staff report. C. Density Bonus Law. Density Bonus Request. The DBL provides that a project with 5 percent very low income units is entitled to a 20 percent density bonus. (§ 65915(b)(1)(B).) This increases on a sliding scale to a 35 percent bonus for a project with 11 percent very low income units. (§ 65915(f)(2).) Without a density bonus, the project at 790 Foothill would be entitled to 48 dwelling units as defined under the City's zoning ordinance. (Under the City's zoning ordinance, studios count as 0.50 unit, one-bedroom units as 0.66 unit, and two-bedroom units as 1.00 unit.) The developer is proposing 12 very low income studio units, equivalent to 6 units, or 12.5 percent of the base density, and so is entitled to the maximum 35 percent density bonus, or 65 dwelling units. The proposed mix of 78 studio, one-bedroom, and two-bedroom units equals the 65 dwelling units allowed. If a development is eligible for a density bonus, state law does not contain any findings that would allow the bonus to be disapproved or reduced. Rather, "a city …shall grant one density bonus…when an applicant for a housing developments seeks and agrees to construct a housing development…that will contain [affordable housing]." (Section 65915(b)(1).) Cases interpreting the density bonus law have all concluded that the City is mandated to permit the bonus. (See, e.g., Latinos Unidos Del Valle de Napa y Solano v. County of Napa (2013) 217 Cal. App. 4th 1160, 1167 ("[S]ection 65915 imposes a clear and unambiguous mandatory duty on municipalities to award a density bonus when a developer agrees to dedicate a certain percentage of the overall units in a development to affordable housing."); Wollmer v. City of Berkeley (2011) 193 Cal. App. 4th 1329, 1330 ("Wollmer") ("Section 65915 mandates that local governments provide a density bonus…") (emphasis added). Nothing in the statute allows the City to reduce the amount of the density bonus or allows the City to add any requirements, such as an economic feasibility study, to those in the State law. Once the project provides the required amount of affordable housing, it is entitled to the density bonus. As applied to the 790 Foothill project, because the project is providing 12.5 percent very low-income units, it is entitled to the 35 percent density bonus, as stated in the staff report. Incentive/Concession and Waiver Requests. Once a developer is eligible for a density bonus, the developer is also entitled to one to three "incentives and concessions" and an unlimited number of "waivers." The 790 Foothill developer has applied for an eight-foot height increase and increase in lot coverage as either an incentive/concession or a waiver. January 8, 2018 Page 4 1808\05\2506552.2 Incentives and concessions are regulatory incentives or modifications of development standards that "result in identifiable and actual cost reductions to provide for affordable housing costs…or rents." (§ 65915(k).) The City can require the developer to provide "reasonable documentation" to establish eligibility for the concession or to demonstrate that it meets the definition. (§ 65915(j)(1.) It does not appear that the developer has provided any documentation to the City of "identifiable and actual cost reductions," and so approval of the increased height and lot coverage as incentives or concessions would not be appropriate. Waivers. The developer has instead stated that the 78 permitted units cannot be constructed on the site unless the height and lot coverage are increased. The City may "in no case" apply any development standard to a project "that will have the effect of physically precluding the construction of a development…at the densities permitted." (Section 65915(e)(1).) The City can therefore not apply any standards to 790 Foothill that would have the effect of preventing the construction of the 78 permitted units. No economic feasibility study is required to justify a waiver; a waiver is based entirely on whether the project can reasonably be built under the usual development standards. (See Wollmer, 193 Cal. App. 4th at 1346.) After reviewing the application, the staff has concluded that the units would need to be reduced from 1,200 sq. ft. to 700 sq. ft. to avoid the need for the height waiver; that it is not certain that even such small units would fit in two residential stories; and that a lot coverage waiver would still be required. The staff report accurately quotes Wollmer as limiting the City's ability to require such major modifications in the project. Additionally, requiring such small units would likely not accommodate families with children, creating a possible violation of state and federal fair housing law. Nonetheless, the City could deny the waivers if it could make one of the following findings: 1. The waivers are contrary to state or federal law; 2. The waivers have an adverse impact on property listed on the California Historical Register; or 3. The waivers would have a “specific, adverse impact” on public health or safety (as defined previously). There is no evidence that any of these findings can be made. The project does not conflict with any state or federal law, and there is no property in the vicinity that is on the California Register. No violation of a public health or safety standard has been identified. January 8, 2018 Page 5 1808\05\2506552.2 Once the project qualifies for the requested waivers, the City cannot deny them unless one of those findings can be made. Conclusion. In our view, the staff report accurately describes the application of the Housing Accountability Act and Density Bonus Law to the 790 Foothill project.