JMBM Development Rights: West Hollywood Moratorium Struck Down by Court of Appeal

How many of you have been the victim of a city’s “urgency” moratorium law that stopped your project cold? I’ve had several such cases in the past couple of years and am pleased to report that in one of those cases, where the client had no alternative but to litigate, we prevailed big time! In a just released published decision, the Court of Appeal in Hoffman Street, LLC v. City of West Hollywood (B210789) (Nov. 23, 2009) held that the West Hollywood moratorium against multi-family housing developments adopted on July 16, 2007, violated the state law which regulates such urgency ordinances by failing to adopt findings specified in Government Code section 65858 (c)(1). This decision will serve as a warning to other cities that they cannot stop development of multi-family housing based on some generic finding of a “threat to the public health, safety, or welfare.” Rather, in order to legally adopt a moratorium that affects the development of multi-family housing, a city will have to comply with the additional specific findings required by section 65858 (c)(1), which the court held are “more extensive and more specific than the findings required upon the adoption or extension of any interim ordinance.” The court went on to hold as follows: “We believe that to satisfy the requirements of [65858 (c)(1)] a written finding by the legislative body must identify both (i) a specific, ‘significant, quantifiable, direct, and unavoidable impact’ upon the public health or safety that would result from continued development approvals, and (ii) objective, ‘written public health or safety standards, policies, or conditions’ on which that impact is based.” In other words, no more free pass for those cities seeking to create barriers to the development of multi-family housing!

Our client, Hoffman Street, LLC, had submitted an application to the city in 2006 to demolish an existing 16-unit apartment building and build a 17-unit condominium complex. The approval was delayed by the city as it considered a designation that the existing property is a historical resource. Although the city’s Historical Preservation Committee rejected the nomination, the City Council on appeal delayed a decision until the very same day that the moratorium was adopted, at which time the City Council held that the historical nomination had no merit and rejected it. Now that the project was relieved of the potential historical designation, it could not proceed as the new moratorium was now in place! Coincidence or a calculated scheme? You decide!

Our lawsuit included claims for damages which were thrown out by the trial court, but reinstated by this decision. In fact, the court’s decision instructs the trial court to take into consideration the conclusion that the moratorium was “invalid as a matter of law” in considering the damage claims. Hence, our clients are now entitled to have a full trial regarding their damage claims. Stay tuned. More fun to come.

Benjamin M. Reznik is Chairman of the Government, Land Use, Environment & Energy Department at Jeffer, Mangels, Butler & Marmaro LLP. For more information, contact Ben at 310.201.3572 or BMR@JMBM.com.

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