Articles Posted in Affordable Housing

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. . . The Corps’ Definition of Waters of the United States

From Clark Morrison:

Clark photoJustice Scalia’s passing may have an immediate impact on the Army Corps of Engineers’ expanded definition of “waters of the United States” under the Clean Water Act. Last October, the United States Court of Appeals for the Sixth Circuit issued a nationwide stay of the Corps’ new broader definition until the matter is fully litigated, citing skepticism over whether the Corps’ definition is scientifically supportable. Recently, the 6th Circuit decided that it will hear the entire case rather than returning it to the district courts for trial. So, we may see a ruling on this regulation much more quickly than we previously anticipated. Should this matter end up before the Supreme Court, it should be remembered that Justice Scalia was a staunch proponent of the idea that the Corps should not exercise jurisdiction over waters that are not truly navigable (e.g., “reasonably permanent flow”).

 

. . . Dueling Ballot Measures for Los Angeles

From Alex DeGood:

Two competing initiatives are currently gathering signatures in the City of Los Angeles for placement on the November 8 general election ballot. One, called “The Build Better LA Initiative,” is sponsored by a coalition of labor unions and housing advocates. The second, called the “Neighborhood Integrity Initiative,” is backed by the Coalition to Preserve LA. Both initiatives would have far-reaching implications for future development in Los Angeles.

What will proposed ballot measures do to LA's skyline?

What will proposed ballot measures do to LA’s skyline?

The Build Better LA Initiative would affect projects requiring general plan amendments or zone changes that permit additional floor area, density, or height. It contains inclusionary affordable housing requirements, mandating affordability for up to 25% of the units in rental projects and up to 40% of the units in for sale housing projects. Offsite affordable housing and the payment of a substantial affordable housing in lieu fee would be options in some instances. The initiative also would impose substantial union labor and local hire requirements on affected projects.

The Neighborhood Integrity Initiative appears to particularly target large development projects. It would impose a two-year moratorium on general plan amendments or zone changes that increase density or intensity. It also would require updating the general plan with various lower-growth principles and limit the City’s ability to approve parking reductions for projects.

Both initiatives take direct aim at the planning and development process in Los Angeles, and either one could dramatically alter development plans across the City.

 

. . . Inclusionary Rental Housing

From Steve Ryan and Tim Paone:

AB 2502 was introduced in the California Assembly on February 19 principally to offset the 2009 court decision in Palmer v. City of Los Angeles and allow local jurisdictions to impose, as a condition of project approval, rental units affordable to, and occupied by, tenants whose household incomes fall within the lower, very low, or extremely low categories. If adopted, AB 2502 also will apply to for sale residential developments. In 2013, Governor Brown vetoed similar legislation, noting that inclusionary rental requirements can “exacerbate” the challenges faced by low and middle income communities seeking to attract new development. That, however, occurred before the California Supreme Court’s ruling in California Building Industry Association v. City of San Jose upholding a City of San Jose ordinance requiring developers to include affordable units in their residential projects. The San Jose ordinance specifically stated that it would not apply to rental projects until either the Palmer decision was overturned by the courts or the Legislature authorized inclusionary rental housing. It will be worth watching to see if the Governor’s views on the potentially negative impacts of inclusionary housing requirements have changed since 2013.

 

. . . The Hiring of a New Executive Director for the Coastal Commission

From Tim Paone:

With the termination of Dr. Charles Lester as Executive Director of the California Coastal Commission, all eyes are on the CommBlack Hat-White Hatission’s selection of his replacement. Lost in the unfortunate characterization of Dr. Lester’s dismissal as a battle between developers and environmentalists was the Commission majority’s stated desire for a more efficient process. Shortly before the Commission hearing on Dr. Lester’s performance evaluation, former Commissioner Jana Zimmer had urged in an Op-Ed that appeared in the Santa Barbara Independent that a “black hat versus white hat” approach to the decision before the Commission was not productive. Given the prominence of the Executive Director position, there should be no shortage of candidates who are effective managers with strong integrity, have credibility with the environmental community, and don’t own either a white hat or a black hat.

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Forget nexus. Don’t worry about rough proportionality. It’s not an exaction and it’s not a taking.  In a ruling that will adversely impact landowner and market-rate developers, while providing new opportunities for affordable housing developers, the California Supreme Court has given the go-ahead to the City of San Jose’s affordable housing ordinance which requires developers to include affordable housing units within their market rate projects, unless they elect other equally impacting alternatives.

As a result of the Court’s ruling today in California Building Industry Association v. City of San Jose, developers should anticipate that both the Legislature and local municipalities will consider new opportunities to increase the numbers and distribution of affordable units, both rental and for-sale, within local communities. One of the important practical effects of this ruling is that municipalities will not need to demonstrate that market rate housing creates the need for affordable housing in order to adopt and implement an affordable housing ordinance.

The San Jose ordinance applies to all for-sale projects of twenty or more new, additional, or modified residential units. The ordinance requires that fifteen percent of a project’s on-site units be available to “moderate income” households, those earning no more than 120 percent of the area median income. The ordinance itself provides that it will not apply to rental units until a 2009 appellate court decision, Palmer/Sixth Street Properties, L.P. v. City of Los Angeles, is no longer the law.  When and if that occurs, the ordinance requires nine percent of the rental units to be available at rates affordable to moderate income households, with another six percent to be available at affordable rates to very low income households. It also contains alternative methods of compliance, such as building off-site affordable for-sale units, paying an in lieu fee, dedicating land, and rehabilitating offsite affordable units. The Court’s focus, however, was on the “inclusionary” component of the ordinance.

In adopting this ordinance, the San Jose City Council found that, among other things, new market-rate housing drives up the price of land and diminishes the amount of land available for affordable housing. It also found that new market rate homes create demands on services resulting in “a demand for new employees” whose earnings will allow them only to pay for affordable housing. Those circumstances, in turn, were found to “harm the city’s ability to attain employment and housing goals articulated in the city’s general plan and place strains on the city’s ability to accept and service new market-rate housing development.”

The stated purposes of the ordinance included meeting the city’s share of regional housing needs, implementing the goals of the city’s general plan and, specifically, its housing element, and providing for the integration of affordable and market rate housing products in the same neighborhoods.

In its ruling, the Court made a critical distinction between affordable housing impact fees intended to mitigate the specific impacts of a project and an inclusionary affordable housing requirement designed “to serve a constitutionally permissible public purpose other than mitigating the impact of the proposed development project.”  In doing so, the Court carefully distinguished both state and federal judicial decisions focusing on “nexus” and “rough proportionality,” concluding that this ordinance is more akin to other “permissible land use regulations,” such as use, density, size, setback, and aesthetic requirements and restrictions and price controls.  As a result, the Court concluded that the San Jose ordinance is neither an exaction nor a taking, but rather a proper exercise of the city’s general police power to regulate land development to promote the public welfare.  In the context of constitutional law, once the Court reached that conclusion, it could only review the ordinance “deferentially” and the burden shifted to the California Building Industry Association to establish that the ordinance bears “no reasonable relationship” to the public welfare, a challenging threshold which the Court determined had not been met.

The Court concluded that increasing the supply and distribution of affordable housing within the city is within the city’s “constitutionally permissible public purposes” and is “intended to shape and enhance the character and quality of life of the community as a whole.”  As a result, the ordinance was found to address “the critical need for more affordable housing in this state” and allowed to stand.

In rendering this decision, the Court has provided public agencies and developers alike with additional guidance on how far a California agency may go in regulating land development before its actions will be considered an exaction subject to the constitutional limitations of “nexus” and “rough proportionality.” The implications of this decision are likely to be significant not only with respect to affordable housing, but also with respect to other land use restrictions and requirements aimed at “promoting the public welfare.”

Unless a hearing before the United States Supreme Court is sought and granted, this is the final say on the validity of San Jose’s affordable housing ordinance.

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2015 is shaping up as a year of significant developments in land use law thanks to the Governor, the Legislature, and the courts. Here’s an update on anticipated developments related to Sea Level Rise, Affordable Housing, Traffic Impact Analysis and the Drought, any or all of which could constrain land development:

 

. . . SEA LEVEL RISE AND THE COASTAL COMMISSION: Prospective purchasers, developers, and owners of coastal land should pay close attention to the Coastal Commission’s development of policies to address rising sea level and its implication not just for coastal resources, but also for existing and proposed development. Although final guidance has not yet been issued, the Commission’s Draft Sea-Level Rise Policy Guidance concludes that sea level rise threatens “seven wastewater treatment plants, commercial fishery facilities, marine terminals, Coastal Highway One, fourteen power plants, residential homes, and other important developSealevel setbackment and infrastructure.” Add in impacts to tourism, commercial fisheries, coastal agriculture, the ports, and sensitive coastal resources and it is easy to anticipate that the projected risks from sea level rise will create tough decisions for the Commission as it acts on Local Coastal Programs, LCP amendments, and Coastal Development Permits. Hazard avoidance and mitigation are likely to result in proposals for significant constraints on development. Every site and project will be different, but it will be important to evaluate the potential significance of sea level rise over the life of the project in the context of any investment or development within the Coastal Zone. The picture above is from a presentation by Charles Lester, Executive Director of the Coastal Commission, to the Senate Budget Subcommittee 2 on March 20, 2014. It shows a pre-Coastal Act home and more current setback requirements along a blufftop in Pismo Beach which has been impacted by bluff erosion.

 

. . . AFFORDABLE HOUSING FEES: We told you earlier this year that the California Supreme Court will be weighing in on the validitysan jose of an in lieu affordable housing fee in San Jose.   Oral arguments in California Building Industry Association v. City of San Jose (click here to read the appellate court decision which is under review) were heard on April 8. CCN’s Mike Zischke was in attendance and observed an engaged and inquisitive Court. When this decision comes down, its significance likely will go beyond the affordable housing issue. With two new Justices sworn in at the beginning of this year, this decision could foretell where the Court will lean on land use issues, particularly those involving exactions and impact fees.

 

. . . THE DROUGHT: Governor Brown’s Executive Order calling for a 25% reduction in the State’s water usage will impact not only daily life for Californians (there goes that ten-minute shower), but potentially development proposals. At a time when some areas in the state are experiencing housing shortages, there undoubtedly will be pressure from some interest groups to cut back on the development of new housing. It’s too early yet to understand what the full effect of Executive Order B-29-15 will be, as local water agencies and local governments will be developing their own policies to comply with the Governor’s directive.

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Here are several potential developments related to affordable housing and CEQA that you should watch for in the coming months:

. . . CEQA REFORM: As we move into 2015, there again will be calls for comprehensive CEQA reform. But will they be heeded? The need for reform is widely acknowledged, as it was by Governor Brown in his 2013 State of the State address: “We . . . need to rethink and streamline our regulatory procedures, particularly [CEQA].” An article in the Environmental Monitor said “In recent years there have been several attempts in the legislature to reform … CEQA. …[Y]et very few substantive changes have been made….” But that was in 1996, seventeen years before the Governor made his comments. Nothing substantive happened in between – or since.

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In many cities throughout California, concerns about traffic have made the State Density Bonus Law (“DBL”) a four letter word. Developers who are otherwise willing to provide affordable units as a component of a market rate multifamily or mixed-use project are increasingly discouraged from doing so. And it’s not getting any easier. On September 27, 2014, Governor Brown signed AB 2222, amending the DBL in response to a growing perception that the DBL could be implemented in a manner that could result in a net loss of existing affordable housing units for new housing projects. The bill requires developers to identify and replace all of a property’s pre-existing affordable units to be eligible for a density bonus under the DBL. While that goal sounds reasonable, in practice, it may prove to be difficult to implement and will most likely not achieve the intended result of retaining and creating more affordable housing throughout California. Continue reading →