Declaring there to be a statewide housing emergency, California state Senator Nancy Skinner (D-Berkeley) introduced Senate Bill 330, on February 19, 2019, to suspend certain regulatory restrictions on the development of new housing and to expedite the permitting of housing in certain high-cost regions for a 10-year period.
Who is responsible for the housing crisis in San Francisco, and what can government do to solve it? As property values have climbed in San Francisco and surrounding areas, that problem has increasingly vexed elected officials and the courts. The First District of the Court of Appeal is the most recent to weigh in, with a decision invalidating a local pro-tenant ordinance. But first, some background.
The Ellis Act is a state statute that prohibits a city or county from “compelling the owner of any residential real property to offer, or to continue to offer, accommodations in the property for rent or lease . . . .” (Gov. Code, § 7060, subd. (d)(a).) In short, the Ellis Act allows a landlord to withdraw a rental unit from the market. In 2014, San Francisco Supervisor David Campos sponsored an ordinance requiring landlords to pay a relocation benefit to tenants being displaced due to the landlord’s “repossession” of the rental unit under the Ellis Act. The payment required was 24 times the difference between the unit’s current rental rate and the “fair market value” of the unit, as calculated by a prescribed schedule. In theory, the displaced tenant was to be compensated for two years’ worth of the differential between what the tenant was paying and what the tenant would pay as fair market rent. Tenants were entitled to the payment regardless of needs or assets, and there was no requirement that the payment actually be spent on expenses of relocation.
Last September we wrote about 616 Croft Ave., LLC v. City of West Hollywood, an opinion from the Court of Appeal for the Second Appellate District upholding a nearly $555,000 in-lieu fee on an 11-unit residential infill project because the fee was “related to the cost of constructing affordable housing units within the City.” Among other things, we noted that the case “underscores the ongoing need for the United States Supreme Court to finally address whether the heightened scrutiny of the Nollan, Dolan, and Koontz Fifth Amendment takings cases applies to legislatively imposed permit conditions.”
On December 21, 2016, the California Supreme Court denied a petition to review 616 Croft Ave., LLC. A petition for writ of certiorari was filed on March 15, 2017 (Case No. 16-1137), giving SCOTUS its opportunity to consider the case.
On November 10, 2016, the U.S. Department of Housing and Urban Development and the U.S. Department of Justice released a “Joint Statement” providing updated guidance on the application of the federal Fair Housing Act to state and local land use laws and practices.
The FHA prohibits a broad range of practices that discriminate against individuals on the basis of race, color, religion, sex, national origin, familial status, and disability. Among other things, the FHA applies to local government entities and prohibits them from making zoning or land use decisions or implementing land use policies that exclude or otherwise discriminate against protected persons, including individuals with disabilities. The FHA does not pre-empt local zoning laws, however, which are is traditionally reserved to state and local governments, except to the extent such laws may conflict with requirements imposed by the FHA or other federal laws.
California’s housing crisis is well-understood and documented. A chief culprit is the fact that the state’s coastal urban areas, for various reasons, do not approve enough new housing to accommodate everyone who seeks to live there.
The lack of new housing development is a function, in part, of the fact that California’s local finance structure essentially incentivizes nonresidential development. There is also limited vacant developable land in coastal urban areas.
On September 29, 2016, in a case of first impression, the Court of Appeal for the Second Appellate District addressed the tensions between the requirements of the Housing Accountability Act, Density Bonus Law, and Mello Law (establishing minimum requirements for affordable housing within the coastal zone) with the California Coastal Act. Kalnel Gardens, LLC v. City of Los Angeles, __ Cal.App.5th __ (2016) (Case No. B264434).
On September 23, 2016, the Court of Appeal for the Second Appellate District affirmed a trial court decision denying a petition for writ of mandate filed by a developer challenging various fees—totaling nearly $600,000—in connection with an 11-unit subdivision and condominium complex in West Hollywood. 616 Croft Ave., LLC v. City of West Hollywood, __ Cal.App.5th __ (2016) (Case No. BC498004).
The case is the first reported appellate decision to rely upon the broad holding of the California Supreme Court’s blockbuster 2015 affordable housing case, California Building Industry Assn. v. City of San Jose, and it boldly highlights the far reaching implications of that ruling. In my opinion, it also underscores the ongoing need for the United States Supreme Court to finally address whether the heightened scrutiny of the Nollan, Dolan, and Koontz Fifth Amendment takings cases applies to legislatively imposed permit conditions. We wrote about that issue earlier this year after the U.S. Supreme Court denied certiorari in the CBIA case, and we note that the Court will soon have another opportunity to grant certiorari on this important issue.
On May 13, 2016, Brown administration released the administration’s “May Revision” budget, which contains a bold proposal in a trailer bill to address California’s long-standing and consequential housing affordability problem, one that has been documented extensively by the Legislative Analyst’s Office.
In particular, the administration has proposed legislation—entitled Streamlining Affordable Housing Proposals—that would provide ministerial, or “by‑right,” land use entitlement provisions for multi-family infill housing developments that include an affordable housing component. The laudable goal of this important bill is to restrain development costs, improve the pace of housing production by increasing certainty and shortening the local approval process, and encourage an increase in housing supply.
February 29, 2016 was a notable leap year day for the United States Supreme Court. To the surprise of most in the courtroom that day, Justice Clarence Thomas asked his first question from the bench in more than 10 years. The Court also issued its first round of orders since the February 13 death of Justice Antonin Scalia, including a denial of certiorari in California Building Industry Association v. City of San Jose, 61 Cal. 4th 435 (2015).