JMBM Development Rights: Density Bonus Under Attack by Cities

In adopting SB1818, the State Legislature thought it had figured out a way to force local jurisdictions to comply with the state mandate of providing more affordable housing long codified in Government Code Section 65915. Despite the fact that this law has been on the books for many years allowing the building of bonus market rate units to help defray the cost of mandated low income units, cities were able to skirt its intended result. They did this by refusing to change their development standards which limited structures in height, floor area, lot coverage, and so forth. Many builders were thus unable to build affordable units simply because they could not squeeze in the density bonus units under the cities’ building envelopes. Without these bonus units, it was economically infeasible to include the affordable housing.

Tired of this gamesmanship, the Legislature adopted SB1818. Now, a city cannot apply any development standard that will have the effect of physically precluding the construction of a density bonus project. A builder can apply for concessions or incentives such as a reduction in development standards (e.g., setbacks, parking, height, square footage, etc.) which the city can only deny if it can make the finding, based on substantial evidence, that the sought after concession or incentive would have a “specific adverse impact….. upon public health and safety or the physical environment…” A city cannot deny a requested concession or incentive as being inconsistent with its general plan or zoning because SB1818 specifically precludes doing so. Finally, SB1818 provides for mandatory attorney fees to a litigant who prevails.

So what’s the problem? Some cities, such as Los Angeles, West Hollywood and Santa Monica have figured out new ways to skirt the requirements of the state density bonus laws. In Los Angeles, the Community Redevelopment Agency has embarked upon a program of downzoning sections of the North Hollywood Area Plan so that when a developer seeks to apply SB1818, he or she comes up with far fewer allowable units. The CRA has done this without the adoption of new zoning ordinances or following the state procedures for public hearings. Our office has filed a lawsuit challenging this action and it is now pending before the Court of Appeal.

West Hollywood has also created a set of new zoning rules to protect itself from SB1818. In 2007, West Hollywood adopted a building moratorium on multifamily construction while it proceeded to downsize the allowable development in all of its multi-family zones. Doing it under the guise of trying to stop the proliferation of large luxury condos, the city proceeded to reduce height and limit the size of each unit that can be built, thereby making it economically infeasible to construct a state density bonus project.

Lest it be outdone, Santa Monica also adopted a moratorium on its very own affordable housing ordinance. Back in 2005, Santa Monica adopted an ordinance that incentivized affordable housing development by allowing any project with at least 20 percent affordability to proceed on a quick Administrative Approval process, in lieu of a more lengthy zoning process. One of our clients decided to take advantage of this incentive and proposed two projects, each with 100 percent affordable housing! Santa Monica immediately adopted a moratorium to stop his projects and then proceeded to change its own laws. How is this an attack on SB1818? The city removed an incentive it created for encouraging the development of affordable housing for fear that SB1818 would restrict its ability to control or deny future affordable housing projects.

Looks like the Legislature may have to make the next chess move!

Benjamin M. Reznik is based in the Firm’s Los Angeles office and is Chairman of the Government, Land Use, Environment & Energy Department at Jeffer, Mangels, Butler & Marmaro LLP. Mr. Reznik’s practice emphasizes real estate development entitlements, zoning and environmental issues, including frequent appearances before city planning commissions, city councils and other governmental boards and agencies on behalf of real estate development firms. For more information, please contact Ben at 310.201.3572 or BMR@JMBM.com.