Housing Developer Prevails in Key Housing Accountability Act Case

California’s First District Court of Appeal recently issued a consequential decision reining in the ability of local agencies to deny housing projects under the Housing Accountability Act (HAA) based on alleged noncompliance with design standards. In California Renters Legal Advocacy and Education Fund (CARLA) v. City of San Mateo (Case Nos. A159320, A159658, September 10, 2021), the court was specifically tasked with interpreting – for the first time – the meaning of “objective” in the context of design standards that may be applied by local agencies to deny an otherwise qualifying housing project under the HAA. This case will likely have implications for housing developers seeking to benefit from the HAA and local agencies seeking to deny those projects.

HAA Background

In 1982, the Legislature enacted the HAA (Gov. Code § 65589.5), colloquially known as the “Anti-NIMBY” law, curtailing the ability of local agencies to deny qualifying housing projects (both market rate and below market rate) in an effort to address the State’s ever increasing housing shortage. The HAA includes numerous, varied measures to, for instance, require approval of certain affordable housing projects in jurisdictions not meeting their Regional Housing Needs Allocation (RHNA) targets and provide very early vesting once a preliminary application is submitted for a housing project. To qualify for vesting and other benefits under the HAA, a project must consist of all residential units or be mixed-use with at least two-thirds of the project square footage designated for residential use.

The following HAA provisions were pertinent in CARLA: (i) when a qualifying HAA housing project “complies with applicable, objective general plan, zoning, and subdivision standards and criteria, including design review standards,” the local agency cannot deny the project or condition the project to be developed at a lower density unless it finds that the project would have specific, adverse impacts upon the public health or safety which cannot be mitigated except through denial of the project or development at a lower density (Gov. Code § 65589.5(j)(1)); and (ii) a qualifying HAA housing project is deemed to comply with pertinent standards if there is “substantial evidence that would allow a reasonable person to conclude” that it complies. (Gov. Code § 65589.5(f)(4).)

Case Background - City Denies HAA Project

In 2015, the project sponsor submitted an application to the City of San Mateo (City) to build a four-story, 10-unit multifamily residential building (Project). Though the Project site is in a high density multi-family zone, the Project would front on two streets developed with single-family homes. The City’s General Plan requires that the Multi-Family Design Guidelines (Guidelines) be applied to the Project because of its location in a primarily single-family neighborhood. The applicable Guidelines provide: “Most multi[-]family neighborhoods in San Mateo are 1 to 4 stories in height. When the changes in height are gradual, the scale is compatible and visually interesting. If height varies by more than 1 story between buildings, a transition or step in height is necessary.”

The Project was presented to the City Planning Commission (Commission) twice in 2017. At both meetings, planning staff, in consultation with the City’s outside design review consultant, recommended that the Commission approve the Project, finding it “in scale and harmonious with the character of the neighborhood” and in compliance with the Guidelines. Specifically, the consultant’s assessment had concluded that the proposed tall trees would “substantially mitigate [the] height differential.” The Project also incorporated trellises at various levels of the building. Nonetheless, the Commission voted to deny the Project for failing to comply with the Guidelines because, due to the more than a one-story height variation between the Project and adjacent homes, a “transition or step in height is necessary” and the Project should “step back upper floors to ease the transition.” On appeal, the City Council upheld the Commission’s denial.

Trial Court Upholds City Denial

CARLA sought a writ of administrative mandamus on the ground the City’s denial violated the HAA. The trial court denied the petition, ruling that the Project did not meet the applicable Guidelines, which the court determined to be “objective” for purposes of the HAA. The court then ruled that to the extent the HAA conflicted with local land use regulations, it was an unconstitutional infringement on the City’s right to home rule and an unconstitutional delegation of municipal powers. CARLA appealed.

Court of Appeal Reverses City Denial

On appeal, the California First District Court of Appeal (Court) reversed, directing the City to vacate the denial and reconsider the Project in accordance with the Court’s decision. As summarized below, the Court issued a series of rulings that strictly define the types of “objective” development standards that may be applied to qualifying HAA projects and upheld the law’s constitutionality.

After reviewing the HAA’s legislative history, the Court made the following generally applicable findings, summarized below:

• Instead of asking whether the City’s findings are supported by substantial evidence, which is the typical standard of review for administrative mandamus actions, the Court “will inquire whether there is ‘substantial evidence that would allow a reasonable person to conclude that the housing development project’ complies with pertinent standards” in accordance with Government Code section 655589.5(f)(4). Further, “[a]s the public entity that disapproved the project, the City bears the burden of proof that its decision conformed to the HAA.”
• A development standard cannot be “objective” if reasonable people can reach different conclusions about compliance with it. In addition, although courts typically defer to a local agency’s interpretation of its own regulations, deference is limited under the HAA.
• Nothing in the HAA prevents a local agency from imposing “appropriate conditions of approval to mitigate any effects the height differential may have on the surrounding neighborhood, as long as those conditions do not reduce the density of the project.”
• The application of the HAA to charter cities is constitutional because the provision of housing is a matter of statewide concern and limiting local governments’ ability to deny new housing development based on subjective criteria is narrowly tailored to address that concern. The Court relied heavily on a previous case, Ruegg & Ellsworth v. City of Berkeley (2021) 63 Cal.App.5th 277, in making that determination, which is summarized in our prior alert.
• The HAA does not divest local agencies of final decision-making control in violation of the California Constitution’s nondelegation doctrine because it does not, contrary to the City’s assertions, allow any private person to force approval of a project by producing any evidence of the project’s consistency with objective standards.

The Court also made the following findings, provided in summary form, which are specific to the Project and the applicable Guidelines:

• The Guidelines do not qualify as “objective” for purposes of the HAA and cannot be used as a basis to deny the Project because there is an “interpretive question” to which “reasonable designers may disagree on the most satisfactory solution,” and here, planning staff and the outside design consultant found the trees and trellises a sufficient height transition while the Commission and City Council did not.
• A “reasonable” person could conclude that a “transition” is something other than a step in building height and to the extent a “step” is needed, the Guidelines do not offer guidance on how extensive the step must be or how many floors must be stepped.

Implications

CARLA is notable for the Court’s strict interpretation of what constitutes “objective” standards for purposes of the HAA and is an important signal to local agencies that state pro-housing legislation will be interpreted broadly in favor of housing developments. Nearing the end of its opinion, the Court sternly declared: “As the Legislature has steadily strengthened the statute’s requirements, it has made increasingly clear that those mandates are to be taken seriously and that local agencies and courts should interpret them with a view to giving ‘the fullest possible weight to the interest of, and the approval and provision of, housing.’ [] The HAA is today strong medicine precisely because the Legislature has diagnosed a sick patient.”