The Terraces of Lafayette is a 315-unit housing development project in Lafayette, California that is perhaps the poster child project under the state’s most important housing production law, known as the Housing Accountability Act (Gov. Code 65589.5’ “HAA”). The project gave rise to the YIMBY movement and the notion of “suing the suburbs.” Intensely opposed for years by an uncompromising local NIMBY group known as Save Lafayette, as well as by a longtime member of Save Lafayette who ran for office to oppose the project and became a councilmember in 2018, the project has been referred to in the press as many things, including “the project that started a housing war.” The project has also twice been a direct catalyst for additional legislative strengthening of the HAA (see Senate Bills 167 and 330). Miller Starr Regalia represented the developer, O’Brien Land Company, in the entitlement and litigation process and on November 30, 2022, two weeks after oral argument, prevailed in a landmark decision, Save Lafayette v. City of Lafayette, __Cal.App.5th __ (2021) (Case No. A164394), rejecting all of Save Lafayette’s claims attempting to thwart the project.
Factual and Procedural Background
The project’s complicated history shines a harsh light on everything wrong with how new housing is developed in California, from the constant weaponization of the California Environmental Quality Act (Pub. Res. Code § 21000 et seq.; “CEQA”) by groups who are not motivated by any actual concern for the environment and who drive up the cost of new housing and bear no consequences for their actions, to the intentionally drawn out processes local agencies use to slow walk applications through the gauntlets of their procedures.
O’Brien filed the apartment project application in March of 2011 and the City deemed the application complete in July of 2011. As proposed, the 315-unit apartment project included 14 residential buildings, a clubhouse, a leasing office, parking in carports and garages, and internal roadways on a 22.27-acre site in Lafayette bounded by Pleasant Hill Road to the east, State Highway 24 to the south, and Deer Hill Road to the north and west, and approximately 1 mile from the Lafayette BART station.
When the application was filed the project site had a general plan land use designation of Administrative/Professional Office/Multi-Family Residential (APO) and matching zoning, which allows multi-family residential development at up to 35 units per acre with the approval of a use permit. Thus, while the apartment project consisted of 315 units, under the APO zoning it could have consisted of 779 units plus a density bonus. An EIR was prepared for the 315-unit apartment project, and the City certified the EIR on August 12, 2013. The project was not voted on at that time, however.
At the behest of the former city manager, O’Brien and City staff then began to consider a lower-density alternative to the apartment project, consisting of 44 or 45 single-family detached homes, public parkland, and other amenities. As part of their discussions, O’Brien and the City entered into an “process agreement,” based on the City’s constitutionally-conferred police power, on January 22, 2014. The process agreement established a process for considering the alternative single-family home project and suspended the processing of the apartment project. The process agreement also expressly allowed O’Brien to resume processing the apartment project if the City did not approve the single-family home project or if anyone brought any kind of legal challenge against that project.
The City certified a supplemental EIR, adopted a general plan amendment changing the project site’s land use designation from (APO) to Low Density Single Family Residential (SFR-LD), rezoned the site from APO to Single Family Residential (R-20), and approved the 44-unit single-family home project on August 10, 2015.
The San Francisco Bay Area Renters’ Federation, known as SBARF, then filed its first ever lawsuit “suing the suburbs,” alleging that Lafayette violated the Housing Accountability Act by forcing O’Brien to reduce the density of the project. The trial court ruled for the City in 2017 and found that because the City did not actually disapprove the apartment project the City did not violate the HAA.
Unwilling to compromise because even 44 single-family homes was too much for it, Save Lafayette filed a writ petition challenging the City’s approval of the single-family home project alleging inadequacies in the SEIR. The parties settled in 2016, and Save Lafayette dismissed the action with prejudice. Despite that settlement, Save Lafayette also circulated a referendum petition challenging the City Council’s approval of the zoning ordinance and requesting that the ordinance be either repealed or submitted to a vote. The City Council declined to do either , however, based on the leading case at the time, Debottari v. City Council, 171 Cal.App.3d 1204 (1985), so Save Lafayette filed a petition for writ of mandate. The trial court denied the petition, also based on Debottari. However, after an intervening change in the law in another case, City of Morgan Hill v. Bushey, 12 Cal.App.5th 34 (2017), which disagreed with Debottari, the Court of Appeal reversed the trial court, in Save Lafayette v. City of Lafayette, 20 Cal.App.5th 657 (2018).
On June 5, 2018, the zoning ordinance appeared on the ballot as Measure L and a majority of Lafayette voters, presumably believing Save Lafayette that O’Brien could not successfully achieve approval of the apartment project, rejected the measure. O’Brien then informed the City that it was immediately resuming processing of the apartment project. Pressured by Save Lafayette to downzone the project site, the City Council conducted multiple hurried hearings during the next two months and downzoned the project site, over O’Brien’s objections and express reliance on the HAA, to Single-Family Residential District-65, which would have allowed a maximum of 14 single-family homes but no apartments.
The City also attempted to force O’Brien to agree to the processing of an SEIR for the apartment project, without substantial evidence of any of the factors under CEQA Guidelines section 15162, which limits the circumstances under which subsequent CEQA review may occur. O’Brien rejected the City’s efforts to force an SEIR and instead prepared an addendum to the 2013 EIR, as required by CEQA Guidelines section 15164. The City peer reviewed the addendum and concluded there was no substantial evidence of significant changes in the project or its circumstances requiring an SEIR, but the City nevertheless prepared a new addendum.
In the summer of 2018 an original member of Save Lafayette, who had long and vocally opposed the project and twice signed petitions against it, successfully ran for city council expressly on the basis of her opposition to the project. Her campaign website stated that:
“My intense civic involvement began 5 years ago with the Deer Hill project, first as 315 Apartments then with 44 Homes. As an engineer, when faced with complicated problems, I knew it was time to roll up my sleeves and delve into the mountain of paperwork for the Homes project. When I discovered that the cancer risk to students at Acalanes High School during construction of the Homes was above allowed limits, I instantly called my friend whose daughter at Acalanes is a cancer survivor, and explained what I had found. She said, ‘We have to stop this, Susan.’ That’s when Mama Bear came out, and my deep civic involvement began.”
Leading California caselaw requires that decisionmakers on adjudicative land use permits not have “an unacceptable probability of actual bias.”
Once elected by Lafayette voters, O’Brien wrote letters to the City providing extensive evidence of the new councilmember’s actual project opposition and bias, and the councilmember eventually recused herself. Although the councilmember later disclosed that the city’s attorney advised her that the law required recusal, she later falsely declared that she had no bias against the project, unrecused herself, and continued to consider the project and oppose it as a councilmember.
After Senate Bill 330 took effect in 2020, the City’s Planning Commission finally approved the 315-unit project, 20 percent of which will be deed restricted for lower-income residents, and its addendum to the 2013 EIR on July 1, 2020. A member of the City Council then brought the project up for review, helping Save Lafayette avoid paying Lafayette’s expensive administrative appeal fees, and the City Council affirmed the Planning Commission’s approval after midnight on August 25, 2022, in a 4-1 vote at the project’s 120th public hearing. The only no vote was provided by the councilmember who ran for office to oppose the project.
Trial Court and Court of Appeal Decisions
Save Lafayette filed a writ petition on September 23, 2020, alleging that, in violation of CEQA, the 2013 EIR did not adequately analyze a number of environmental impacts and that an SEIR was necessary. It also alleged the project was inconsistent with applicable general plan and zoning requirements because the project was somehow “timed” out under the Permit Streamlining Act (Gov. Code § 65920 et seq.; “PSA”) and that it was thus not protected by the HAA against the redesignation and rezoning of the project site. The trial court denied the petition, rejecting all of Save Lafayette’s challenges to the adequacy of the EIR and addendum and found that, despite the delay while the parties pursued the compromise single-family homes project Save Lafayette repeatedly challenged, O’Brien was entitled under the HAA to the benefit of the zoning in place when the application for the apartment project was deemed complete in 2011. Save Lafayette then appealed the trial court ruling.
In a partially published decision on November 30, 2022, in Save Lafayette v. City of Lafayette, __ Cal.App.5th __ (2022) (Case No. A164394), the First District Court of Appeal unanimously rejected all of Save Lafayette’s challenges and affirmed the trial court. Framing the issue as whether, under the HAA, the general plan and zoning standards in effect when the application was deemed complete in 2011 govern the project, or whether the PSA’s time limits deprived the City of the power to act on the application, such that the applicant must be treated as if it had resubmitted its application when it asked the City to resume processing the apartment application in 2018, the Court recognized that this is a legal issue that requires it to determine how the HAA and PSA apply to the project given its complicated facts.
The Court began its analysis by recognizing that the Legislature has instructed that the HAA’s provisions must “be interpreted and implemented in a manner to afford the fullest possible weight to the interest of, and the approval and provision of, housing.” (Gov. Code § 65589.5(a)(2)(L); California Renters Legal Advocacy & Education Fund v. City of San Mateo, 68 Cal.App.5th 820 (2021)). And under the HAA, a local agency may not disapprove or approve in a manner that renders infeasible an affordable housing development unless it finds that the project is inconsistent with the general plan land use designation and zoning ordinance existing when the application was deemed complete. (Gov. Code, § 65589.5(d)(5)). Thus, even if a project is inconsistent with the current general plan or zoning standards, under the HAA it may need to be approved if it was consistent with standards existing when the application was deemed complete.
The PSA addresses processes for permitting housing and other development projects. Once a development application is deemed complete, the PSA establishes deadlines for a public agency to approve or disapprove it, deadlines that vary with the extent of environmental review required. The goal of the PSA is to relieve permit applicants from protracted and unjustified delays in processing their permit applications.
Considering the HAA and PSA together, the Court rejected Save Lafayette’s arguments for four reasons.
The Court first explained that nothing in the PSA states that an application is deemed withdrawn, deemed disapproved, or deemed resubmitted at a later date if, after the agency fails to act within the PSA’s time limits. Moreover, given that the statute expressly addresses deeming an application complete or deeming it approved (Gov. Code §§ 65943(a) and 65956(b)), the Court considered this silence significant.
Second, the Court considered “implausible” Save Lafayette’s argument in favor of restarting the clock in 2018 when processing of the apartment application resumed. The Court recognized that that is not what happened here, where the City found the application to be complete in 2011, no resubmission was required, and no reevaluation of the application’s completeness occurred.
Third, the Court held that Save Lafayette’s construction of the PSA is in tension with the provision that expressly requires disapproval of applications to be accompanied by findings that must specify reasons for disapproval other than the failure to timely act in accordance with the time limits of the PSA. (Gov. Code § 65952.2).
Finally, and most importantly, the Court noted that it was not dealing with the PSA in a vacuum but rather in its relation to the HAA. The Legislature has found that California has a “housing supply and affordability crisis of historic proportions” and that 15 millions of Californians are hurt by the “consequences of failing to effectively and aggressively confront this crisis.” (Gov. Code § 65589.5(a)(2)(A)). The Legislative intended in adopting and subsequently expanding the HAA “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.” (Gov. Code § 65589.5(a)(2)(K).) And the Legislature directed that the HAA be interpreted and implemented to “afford the fullest possible weight to the interest of, and the approval and provision of, housing.” (Gov. Code § 65589.5(a)(2)(L)). According to the Court, “[t]hese key considerations weigh in favor of fixing the date on which the application was complete on the date when the City actually made that determination—in 2011—rather than at some later date after the City had twice down-zoned the project site to allow for much less housing development.”
The Court thus handily rejected Save Lafayette’s contention that O’Brien lost the benefit under the HAA of having submitted a complete application in 2011, after the City failed to timely approve after certifying the EIR. The trial court “rightly refused to disturb” the City’s approval of the resumed apartment project and under the controlling provisions of the HAA its inconsistency with the general plan and zoning standards of June 2018 was immaterial. O’Brien successfully got a complete project application filed in 2011, and the HAA requires that such a project be assessed against 2011 general plan and zoning standards.
In the unpublished portion of the opinion, the Court recognized that it does not pass on the correctness of the environmental conclusions in the EIR but only on its sufficiency as an informational document, and held that the 2013 EIR was adequate as an informational document and was not “stale.” The Court also held that Save Lafayette did not show that an SEIR was required when the apartment project was resumed in 2018 and there was substantial evidence in support of the addendum.
Conclusion and Implications
Save Lafayette is a critically important case of first impression in several respects. It marks the first time an appellate court has been asked to harmonize the HAA and the PSA and to address whether a development application automatically expires under the PSA if the application is not approved within the PSA’s directory deadlines. The Court relied squarely on and correctly deferred to the HAA’s powerful pro-housing mandate and resoundingly and unsurprisingly said that the answer is no. It is also the first time an appellate court has considered subsection (d) of the HAA, which deals only with projects such as the Terraces that are defined as affordable under the statute. The Court applied the HAA as it is written and intended and held that even if a project is inconsistent with the current general plan or zoning, cities and counties must consider projects based on the standards existing and in effect when the application was deemed complete.
As helpful as Save Lafayette is to developers of new housing in California, particularly in communities resistant to change, the case also underscores the importance and necessity of the state’s various housing production laws and highlights areas where local control should be further curtailed through further strengthening of the HAA.
Questions? Please contact Bryan W. Wenter, AICP of Miller Starr Regalia.
For more than 50 years, Miller Starr Regalia has served as one of California’s leading real estate law firms. Miller Starr Regalia has expertise in all types of real property matters, including full-service litigation and dispute resolution, transactions, acquisitions, dispositions, leasing, financing, common interest development, construction, management, eminent domain and inverse condemnation, exactions, title insurance, environmental law, and land use. Miller Starr Regalia attorneys also write Miller & Starr, California Real Estate 4th, a 12-volume treatise on California real estate law. “The Book” is the most widely used and judicially recognized real estate treatise in California and is cited by practicing attorneys and courts throughout the state. For more information, visit www.msrlegal.com.