Another San Francisco Ordinance Falls To The Ellis Act

Once again, the City and County of San Francisco has been found to have exceeded the limits of its authority under the Ellis Act in its efforts to deter conversion of residential rental units. Small Property Owners of San Francisco Institute v. City and County of San Francisco, 22 Cal. App. 5th 77 (2018).

The Ellis Act prohibits local governments from “compel[ling] the owner of any residential real property to offer, or to continue to offer accommodations in the property for rent or lease.” (Gov’t Code § 7060(a).)  Courts have held that the Ellis Act completely occupies the field of substantive eviction controls over landlords who withdraw units from the market and prohibits local ordinances that penalize the exercise of rights established by the statute.

The ordinance challenged in this case modified the City’s Planning Code to permit enlargement, alteration or reconstruction of nonconforming residential units in zoning districts where residential use was principally permitted, but imposed a 10-year waiting period for units that had been the subject of a “no fault” eviction. Small Property Owners of San Francisco Institute (“SPOSFI”) sued, claiming that the imposition of a 10-year waiting period penalized the exercise of the right to exit the rental business and therefore conflicted with and was preempted by the Ellis Act.

The City argued (1) SPOSFI could not state a facial challenge to the Ordinance; and (2) the imposition of the 10-year waiting period fell within the City’s authority to regulate land use and mitigate impacts on displaced tenants.

The court rejected both arguments. It found that SPOSFI did state a facial challenge to the Ordinance because, in every case where a property owner exercised its Ellis Act rights, the property owner had a locally imposed legal barrier of a 10-year waiting period to make alterations, and it did not matter that the waiting period occurred after the eviction rather than before. The court also held that the complete prohibition of alteration of a nonconforming unit for 10 years reached beyond regulating the particulars of a property owner’s proposed alterations and yet did not help displaced tenants — it therefore constituted an undue burden on the exercise of Ellis Act rights in violation of the Act.

School Fees for Apartment Buildings Not Limited to Square Footage of Individual Units

School impact fees for an apartment complex must be calculated based on the square footage of both the individual units and other space within the interior of the buildings, such as hallways and elevator shafts. 1901 First Street Owner v. Tustin Unified School District, 21 Cal. App. 5th 1186 (2018).

School impact fees under Government Code section 65995 are based on “assessable space,” defined as “all of the square footage within the perimeter of a residential structure, not including any carport, covered or uncovered walkway, garage, overhang, patio, enclosed patio, detached accessory structure, or similar area.” (§ 65995(b)(1).) This square footage is to be “calculated by the building department of the city or county issuing the building permit, in accordance with the standard practice of that city or county in calculating structural perimeters.” (Id.)

The City of Tustin calculated the square footage of an apartment building owned by 1901 First Street using a “net rentable” method — the City’s standard practice at that time — which included the square footage of the individual apartment units but excluded everything else in the building. The school district objected to this method, contending that the statute required all space within the perimeter of the building to be included. The City then revised its square footage calculation based on the perimeter of the building, which resulted in an increase in the fee of over $238,000. First Street sued to recover the difference.

First Street’s principal argument was that, in the case of apartment buildings, the area of a “residential structure” was limited to the apartments themselves, pointing to the exclusions in section 65995(b)(1) for “any carport, covered or uncovered walkway, garage, overhang, patio, enclosed patio, detached accessory structure, or similar area.” The court found that none of these exclusions applied to areas within the interior of apartment structures, such as lounge areas, recreation rooms, indoor pools, elevator shafts, mechanical rooms and the like. The only potentially applicable exclusion, the court said, was for walkways. It concluded, however, that the statute used the term walkway “in the sense of an external walking path” not in the sense of an internal hallway, reasoning that the other items in the list—such as carports, garages and patios—were typically located at or near the periphery of a residential structure, and that the Legislature had specified these exceptions to make it clear that these peripheral areas were not intended to be included as assessable space.

First Street also argued that the City’s standard practice of calculating net rentable space should govern, relying on the provision in section 65995(b)(1) that “the square footage within the perimeter of a residential structure shall be calculated by the building department of the city . . .  in accordance with the standard practice of that city . . . in calculating structural perimeters.” (Emphasis added.) The court disagreed, concluding that the “standard practice” referred to in the statute was specifically the standard practice of calculating the square footage “within the perimeter of a residential structure,” which had to comply with section 65995(b)(1).

First Street’s final argument was that the City’s decision to change its method of calculating assessable space violated First Street’s vested rights to proceed in accordance with the rules, regulations and ordinances in effect at the time of the approval of its vesting tentative map. The court rejected this argument, citing Government Code section 66498.6(b), which states that approval of a vesting tentative map “does not grant local agencies the option to disregard any state or federal laws, regulations, or policies.” The City’s standard practice, the court stated, was not in compliance with state law; hence the City could adopt a new rule implementing the statutory mandate without violating any vested rights.

Homeowners Association Land Use Approval Process Is Protected Activity Under Anti-SLAPP Statute

The California Court of Appeal for the Fourth District has determined that the actions of a homeowners association undertaken in accordance with its land use approval process are protected activities in furtherance of free speech under California’s anti-SLAPP statute. Golden Eagle Land Investment, L.P. v. Rancho Santa Fe Association, 19 Cal. App. 5th 399 (2018)

Background. Two developers proposed a joint project to build residential housing units for senior citizens on property near Rancho Santa Fe, California. Because the project would exceed local density restrictions, the developers sought approvals from both the County of San Diego and the Rancho Santa Fe Association. Initially, the association expressed support for the development. But that changed following an association meeting at which community members expressed opposition to the project. Following the meeting, the association sent communications to the county recommending the county follow current zoning requirements until the association determined whether it would approve the project.

After the developers failed to secure the necessary approvals, they filed suit against the association asserting nine causes of action alleging violations of the Common Interest Development Open Meeting Act, breach of fiduciary duties, fraud, and interference with business relations. While the complaint separated these theories into separate causes of action, the crucial allegations common to each were that the association initially expressed to the developers that it supported the project; the association refused the developers’ request to reschedule an “informational public meeting” to discuss the project; the meeting agenda did not adequately describe the meeting; and the association improperly influenced the county to reject the project.

In response, the association filed a special motion to strike all nine causes of action under California’s anti-SLAPP statute, Code of Civil Procedure § 425.16. The trial court granted the association’s motion as to eight causes of action, but denied the motion as to the cause of action for violations of the Open Meeting Act. The trial court ruled that the association’s alleged activities were not protected under sections 425.16(e)(1) or (2) of the Act as activities occurring during an “official proceeding.”

The Court of Appeal’s Decision. The court of appeal held that the trial court erred in finding the association’s alleged violations of the Open Meeting Act were not based on protected conduct in furtherance of free speech, and upheld the trial court’s rulings striking the developers’ other claims.

Application of the anti-SLAPP statute requires a two-step analysis. First the defendant must demonstrate that the cause of action arises from protected activity. If the defendant does so, the burden then shifts to the plaintiff to demonstrate that it is likely to prevail on its claims.

Regarding the Open Meeting Act cause of action, asserted by only one of the developers, the court concluded that it was unclear whether the association’s activities should qualify as “official” governmental actions under the statute. The court held, however, that the anti-SLAPP statute applied because the activities complained of—communicating with project applicants, setting agendas, and sending emails and letters—were all within the quasi-governmental responsibilities of the association. As a result, the association’s actions fell within the broader protections of section 425.16(e)(4) as “conduct in furtherance of the exercise the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest.” Under the second prong, the court held that the developer could not demonstrate a probability of success on the merits because it was not a member of the association and therefore lacked standing to seek relief under the Open Meeting Act.

For the remaining causes of action based on the association’s alleged breach of fiduciary duties, fraud, and interference with business relations, the court held that the crux of these causes of action was the same as the set of allegations giving rise to the Open Meeting Act cause of action. Thus, these causes of action also arose from protected activities. And because the developers did not show they could prevail on the merits of those claims, the trial court did not err by striking them.

Conclusion. While the court acknowledged that the case presented a “close question as to the applicability” of the anti-SLAPP statute, it broadly held that that the association’s activities concerning property entitlements “are matters of public interest” and therefore are protected activities in furtherance of free speech. The court did not suggest any limitations or provide any guidance as to how broad a segment of the public must be affected for the challenged activities to be considered as in the public interest.

 

Court Gives Green Light to Referendum of Ordinance Adopted to Conform Zoning With General Plan

A referendum requiring either the rejection of an enacted zoning ordinance or submission to the voters that would leave in place zoning inconsistent with a general plan does not violate Gov’t Code Section 65860, according to the court’s decision in Save Lafayette v. City of Lafayette, 20 Cal. App. 5th 657 (2018).

The City of Lafayette amended its general plan to designate a parcel residential in anticipation of a residential development project. After the general plan amendment became effective, the city enacted a zoning ordinance to conform the parcel’s zoning with the general plan. The plaintiffs, Save Lafayette, subsequently collected signatures and properly filed a referendum requesting the city to either prevent the enacted zoning ordinance from taking effect or submit it to a vote.

The city declined either option, asserting that preventing the ordinance from taking effect or submitting it to voters would violate Gov’t Code Section 65860, resulting in zoning inconsistent with the city’s general plan. The city defended its decision by relying on deBottari v. City Council, a key case decided in 1985 in which the court held that the City of Norco correctly refused to certify a referendum that would have rejected a zoning ordinance that was amended to be consistent with the general plan.

The court disagreed with this characterization. Relying on the recently-decided City of Morgan Hill v. Bushey, the court held that the referendum would not violate Section 65860 because it did not seek to enact new zoning inconsistent with the general plan. At most, the referendum would preserve the existing zoning designation on the parcel, which had become inconsistent because of the recent amendment to the general plan.

The court acknowledged that if instead an initiative was proposed to change the zoning to a designation inconsistent with the general plan, that this would violate Section 65860. This was not the case here; the referendum could lead to the rejection of the new zoning ordinance, but it did not propose to enact zoning inconsistent with the general plan. While the referendum amounted to a challenge to the city’s choice of zoning, it did not further constrain the city’s ability to enact another suitable zoning designation.

The California Supreme Court recently granted review of Bushey to address the split in authority among the courts of appeal. The case summary on the court’s web site describes the issue presented as follows: “Can the electorate use the referendum process to challenge a municipality’s zoning designation for an area, which was changed to conform to the municipality’s amended general plan, when the result of the referendum – if successful – would leave intact the existing zoning designation that does not conform to the amended general plan?”

The court’s review should settle whether a referendum that seeks to overturn a new zoning ordinance violates Section 65860 if it leaves in place zoning inconsistent with a general plan.

EPA Delays Applicability of Clean Water Rule While Challenges to Rule Proceed in District Courts

As reported in our prior Update, in a decision issued on January 22, the U.S. Supreme Court ruled in National Association of Manufacturers v. Department of Defense, 138 S. Ct. 617, that challenges to the Obama administration’s 2015 Clean Water Rule must be brought in federal district courts, rather than directly in the federal courts of appeals. The Court’s decision will likely prolong the ongoing litigation over the validity of the Rule.

Shortly after the Court’s decision, the Trump administration delayed the Rule’s applicability date for two years while it works on rulemakings to rescind and replace the Rule. Continue Reading

Clean Water Act Permit May Be Required for Pollution Discharged Indirectly into Navigable Waters

A Clean Water Act permit is required for discharging wastewater from injection wells into groundwater where wastewater is “fairly traceable” to navigable waters, the U.S. Court of Appeals for the Ninth Circuit held in Hawai’i Wildlife Fund v. County of Maui, 881 F.3d 754 (9th Cir. 2018). Continue Reading

Clean Water Act Requires Permit for Pollution Discharges from Oyster Hatchery’s Pipes

The Clean Water Act requires a permit to discharge pollutants through pipes, ditches, and channels from an oyster hatchery, even though the facility would not be subject to the Act’s permitting requirements as a “concentrated aquatic animal production facility,” the U.S. Court of Appeals for the Ninth Circuit held in Olympic Forest Coalition v. Coast Seafoods Co., 884 F.3d 901 (9th Cir. 2018). Continue Reading

City’s Bifurcated Procedure For Appealing Approval of Entitlements Separately From CEQA Determinations Upheld

The Fourth District Court of Appeal upheld a mitigated negative declaration where the project opponent correctly appealed the approval of entitlements but failed to properly appeal the CEQA determination under the City of San Diego’s bifurcated appeals process. Clews Land & Livestock, LLC v. City of San Diego, 19 Cal. App. 5th 161 (2017).

A city hearing officer approved permits and adopted a mitigated negative declaration for development of a private school on Clews Ranch Road, adjacent to  a horse ranch owned by Clews Land & Livestock.  Under the city code the entitlement approvals had to be appealed to the planning commission, and the CEQA determination to the city council, both within 10 days after the hearing officer’s decision.

Clews Land appealed both the project entitlements and CEQA determination to the planning commission. After the planning commission upheld the project approval, the project opponent appealed the hearing officer’s CEQA determination to the city council. By then, 10 days had elapsed and the city council refused to hear the appeal, citing its untimeliness.

Clews Land filed suit and the trial court upheld the city’s actions. On appeal, the court agreed with the trial court that Clews Land failed to exhaust its administrative remedies and rejected the claim that the city’s bifurcated appeal process violated CEQA. The hearing officer was the “decision making body” for the project, with authority under the city code to approve the permits and to comply with CEQA by adopting or certifying the appropriate environmental document. And under the city code, all CEQA determinations not made by the city council had to be appealed directly to the city council.

Although the court had concluded Clews Land had failed to exhaust administrative remedies, it nevertheless addressed its challenges to the mitigated negative declaration. First, the court was generally dismissive of the claim that the project would have a significant impact on fire hazards in the area. The court found that neither the project opponent nor their expert, made a fair argument as to why the project would significantly increase fire hazards. The expert’s questions and comments were general in nature and did not establish a nexus to the project. Furthermore, that the project was located in a severe fire hazard zone was, on its own, insufficient to establish a significant impact: CEQA requires consideration of a project’s impact on the existing environment, not the environment’s impact on the project.

The court also quickly dismissed claims of impacts on traffic. The project opponent’s lay testimony that Clews Ranch Road could not support both the horse ranch and the school was insufficient because no factual basis was offered for this conclusion. The court observed that Clews Ranch Road was 20 feet wide, only 1,650 feet long, and had historically supported traffic to and from the large commercial ranch without incident.

In regards to noise impacts, Clews Land alleged that construction of the school and school activities could frighten horses and disrupt ranch operations. The court was not persuaded because the project was located near existing sources of noise, a busy highway and the large horse ranch. Furthermore, the court explained, the particular noise impacts on the horse ranch are not relevant under CEQA, which requires analysis of a project’s impact on the environment, not on particular persons or the operation of a nearby business.

The court also found no issue with the addition of the school’s shuttle bus plan and a condition that the school be closed on red flag fire warning days, after the mitigated negative declaration was circulated. These conditions of approval, the court concluded, were voluntary and therefore did not constitute mitigation measures requiring recirculation of the mitigated negative declaration.

 

Air Resources Board’s Regulatory Relief For Small Truck Fleets Violated CEQA

A court of appeal has held that the California Air Resources Board violated CEQA when it issued a “regulatory advisory” notifying small trucking operations that they need not meet ARB’s regulatory deadline for retrofitting their truck engines, and that the regulation would soon be relaxed. John R. Lawson Rock & Oil, Inc. v. State Air Resources Board, 5th Dist. Case No. F074003 (Jan. 31, 2018). The court rejected ARB’s argument that it did not need to prepare the equivalent of an environmental impact report before issuing the regulatory advisory.

In 2008, ARB adopted its Truck and Bus Regulation, requiring retrofits or upgrades to large diesel vehicles so that their air pollutant emissions would not exceed those of model year 2010 or newer trucks. January 1, 2014, was to be the deadline for small fleets to bring at least one of their trucks into compliance. By October 2013, the vast majority of the 260,000 California-registered trucks were in compliance; of those that still needed retrofits, most were in small fleets. In November 2013, ARB decided to ease the rules applicable to small fleets, issuing a “regulatory advisory” that it would take no enforcement action against noncompliant truck operators before July 1, 2014, and that operators could rely on five regulatory changes ARB planned to adopt in 2014 that would make the Truck and Bus Regulation more lenient.

In 2014, ARB approved the revised regulations without preparing an EIR-equivalent CEQA document under its certified regulatory program. ARB reasoned: “The amendments only change the mid-term timing of clean-up of the truck fleet and, therefore, do not result in any increase in emissions compared to existing environmental conditions.” A truck operator that had complied with the regulation on time sued, alleging ARB had violated CEQA and the Administrative Procedures Act.

Citing the California Supreme Court’s decision in Save Tara v. City of West Hollywood, the court held that ARB violated CEQA when it approved the regulatory advisory in 2013, because it had publicly announced that the regulation would be changed and that its existing terms would not be enforced. In so doing, ARB significantly furthered its proposed 2014 regulatory changes in a manner that foreclosed alternatives or mitigation measures, including the alternative of not going forward with the project. Accordingly, CEQA compliance was required at that point.

The court ruled that that ARB was required to prepare the equivalent of an EIR for its relaxation of the Truck and Bus Regulation, based on the difference between future conditions with and without its proposed regulatory change. The court cited CEQA’s requirement that a lead agency discuss any inconsistencies between the proposed project and applicable plans, including the State Implementation Plan for air pollutant reductions and the state’s plans for reductions in greenhouse gas emissions. Because there was a fair argument that ARB’s action would conflict with these plans, at least in the short- to medium-term, an EIR-equivalent document was required.

The decision in Lawson demonstrates both the difficulties ARB faces in conforming its regulatory decisionmaking to the demands of CEQA and the heightened attention courts pay to air quality and greenhouse gas impacts.

Court Upholds Use of Small Facilities Exemption for Microcell DAS Project

In Aptos Residents Association v. County of Santa Cruz, the court of appeal upheld Santa Cruz County’s use of a CEQA exemption to approve a distributed antenna system (often referred to as a DAS) for the provision of cell service. (6th Dist., No. H042854, Feb. 27, 2018.)

The court found that the project fit squarely within the intended scope of CEQA’s Class 3 categorical exemption for small facilities and structures. The court also rejected petitioners’ arguments that there was an applicable exception that would have precluded the use of the exemption.

Background

The project involved 10 microcell transmitters that would be used as part of Crown Castle’s distributed antenna system. Each microcell consisted of a two-foot by one-foot antenna mounted on an extender pole that would be attached to an existing utility pole. Crown Castle submitted a separate permit application for each microcell. Raising concerns about health and aesthetics, residents began mounting opposition to the project.

The county jointly considered the applications for the microcells and determined that they fell within the Class 3 exemption for small structures. After conducting site visits and reviewing photo simulations, the county concluded that the microcells would not result in any visual or other environmental impacts. Residents filed suit, contending that the county’s approval of the project violated CEQA.

The Court’s Decision

The residents’ petition claimed the county violated CEQA in several ways: by improperly segmenting the project; by finding the project fell within the Class 3 exemption; and by using an exemption where an exception barred an exemption. The court of appeal found these claims unavailing.

Improper segmentation

The court rejected petitioners’ contention that because Crown Castle applied for a separate permit for each microcell, the project was improperly segmented. The county expressly considered the project to be the entire group of microcells and found that the Class 3 exemption was applicable to all of the microcells. The fact that Crown Castle filed a separate permit for each microcell unit was irrelevant.
Applicability of exemption.

The Class 3 categorical exemption applies to “limited numbers of new, small facilities or structures” including “electrical, gas, and other utility extensions.” The court found the project to fall squarely within the class of projects intended to be covered by this exemption, recognizing that the exemption extends to multiple small structures in scattered locations.

Exceptions to the use of the exemption

Petitioners urged the court to find applicable several exceptions that would have precluded the use of the Class 3 exemption. The court declined, finding that that petitioners failed to meet their burden to identify evidence supporting an exception.

           Cumulative impact exception. The cumulative impact exception bars an exemption where the cumulative impact of “successive projects of the same type in the same place, over time is significant.” Petitioners claimed that this exception should apply because AT&T intended to implement its own distributed antenna system in the area at some time in the future. The court rejected this argument as amounting to “mere speculation” as petitioners provided no evidence that AT&T was actually pursuing a project or any evidence of the location of AT&Ts would-be facilities.

           Location exception. The CEQA Guidelines prohibit use of the Class 3 exemption if the activity may have an impact on an environmental resource of “hazardous or critical concern where designated, precisely mapped, and officially adopted pursuant to law by federal, state or local agencies.” The county’s zoning of the project area as “Residential Agricultural” did not meet this requirement as nothing in the zoning ordinance specifically designated the zone as “an environmental resource of hazardous or critical concern.”

          Unusual circumstance exception. Under the CEQA Guidelines, an exemption cannot be used where there is “a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances.” The court found nothing unusual in microcells being built in rural areas, as such areas “clearly need utilities, including cell coverage.”

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