New Ethics and Campaign Contribution Rules Enacted in San Francisco

San Francisco voters enacted a measure, Proposition T, that makes significant changes to the city’s rules governing gifts and campaign contributions to city officers, elected officials and candidates.

  • As the City of San Francisco broadly defines the term “lobbyist” to include individuals and companies that spend to encourage the public to communicate with city officials, Proposition T will have a broad impact, including on lobbyists, lobbying firms, corporations and others that employ lobbyists.
  • Conduct in the fourth quarter of calendar year 2017 may trigger certain restrictions in Proposition T, and companies and others planning to make contributions during the 2018 cycle should be mindful of these rule changes.

An update recently posted by Perkins Coie briefly details the new requirements imposed by Proposition T.  Read the full update here.

California Supreme Court Holds City EIR Must Identify and Analyze Potential Environmentally Sensitive Habitat Areas Under the Coastal Act

A local agency’s environmental impact report must identify any areas on a project site that might qualify as “Environmentally Sensitive Habitat Areas” under the California Coastal Act, and must account for those areas in the EIR’s analysis of project alternatives and mitigation measures.  Banning Ranch Conservancy v. City of Newport Beach, California Supreme Court Case No. S227473 (March 30, 2017).  Even where the Coastal Commission, and not the local agency, will make the final ESHA identifications, and only the Coastal Commission can issue a coastal development permit, the CEQA lead agency must address ESHA questions and cannot defer those questions to a subsequent Coastal Commission permitting process.

coastal ranch

The CEQA statute and Guidelines require lead agencies to integrate, to the maximum extent feasible, their CEQA review with planning and environmental review procedures required by other laws.  In addition, CEQA requires lead agencies to consider related environmental regulations and matters of regional significance when weighing project alternatives. Citing these provisions, the Court concluded that the City of Newport Beach erred in declining to attempt to identify ESHA on the 400-acre Banning Ranch project site, where some ESHA were already known to exist.

Although the city had no authority to designate ESHA on the property, the Court explained that the city was not required to make “legal” ESHA determinations in its EIR.  Instead, the city was required to “discuss potential ESHA and their ramifications for mitigation measures and alternatives when there is credible evidence that ESHA might be present on a project site.”

The Court also rejected the argument that the city’s attempt to analyze ESHA impacts would be speculative.  Precision was not required, the Court said, adding that the city had routinely evaluated ESHA impacts for other locations that, unlike the Banning Ranch site, were covered by the city’s coastal land use plan.

The fact that the Coastal Commission would later consider ESHA during its permitting process did not help the city’s position because “[t]he City’s approach, if generally adopted, would permit lead agencies to perform truncated and siloed environmental review, leaving it to other responsible agencies to address related concerns seriatim.”

The Court noted that an agency’s failure to integrate its CEQA review with other environmental review procedures “to the maximum extent feasible” would not always call for reversal of a project approval.  Here, however, the Court concluded that the city’s omission resulted in inadequate evaluation of project alternatives and mitigation measures; suppression of information highly relevant to the Coastal Commission’s permitting function; and failure to provide the public with a full understanding of the environmental issues raised by the project proposal.  Accordingly, the Court determined that reversal was required.

This case may change many CEQA lead agencies’ approaches to regulatory topics that are the subject of permitting by other agencies under statutory schemes other than CEQA.  EIRs that defer discussion of such topics to other agencies’ subsequent processes will be vulnerable to legal challenge.

Ellis Act preempts San Francisco ordinances requiring landlords to pay enhanced relocation payments

The Court of Appeal ruled that the Ellis Act preempted measures mandating relocation assistance payments of “the difference between the tenant’s current rent and the prevailing rent for a comparable apartment in San Francisco over a two-year period” because such mitigation constituted a prohibitive price for landlords to exit the rental business. Coyne v. City and County of San Francisco, No. A145044, A14569 (1st Dist. (March 21, 2017)).

Ordinance 54-14, enacted by the City and County of San Francisco entitled a tenant to an increased relocation payment in the amount of “the difference between the tenant’s current rent and the prevailing rent for a comparable apartment in San Francisco over a two-year period” and contained provisions allowing property owners to seek relief from the local rent board. A trial court found Ordinance 54-14 to be preempted by the Ellis Act, Govt. Code 7060, which prohibits a city or county 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.”

Following the trial court’s invalidation of Ordinance 54-14, the City both appealed and enacted a new ordinance.  The new Ordinance 68-15 capped the rental payment differential at $50,000 and conditioned receipt of the payout on a tenant’s submission of a statement under penalty of perjury that such payment would be used solely for relocation costs. After the trial court invalidated Ordinance 68-15 in a separate action, and the City appealed, the court consolidated the two appeals.

As a preliminary matter, the court ruled that a local law may not impose a “prohibitive price” on a landlord’s exercise of the right under the Ellis Act to withdraw from the residential rental business. Reviewing the ordinances de novo under the “prohibitive price” test, the court concluded the ordinances both imposed a prohibitive price on a landlord’s ability to exit the residential rental business and were thus preempted by the Ellis Act.

Relying on prior caselaw, the court observed that the Ellis Act does not permit the City to condition a landlord’s departure from the rental marked “on the payment of a ransom.” The court concluded that the obligation of landlords to pay former tenants a payout over two years was a form of ransom that “interferes with and places an undue burden on landlords who seek simply to go out of business.”

Although the Ellis Act allows for municipalities to impose mitigation measures on landlords to alleviate “any adverse impact” from displacement, the court noted that such savings clauses are strictly construed.  The court determined that a landlord’s withdrawal of the unit does not cause the rent differential gap faced by the tenant because the gap arises from the City’s policy decision to impose residential rent control. It stated that “a property owner’s decision to withdraw from the residential market may not be frustrated by burdensome monetary exactions from the owners to fund the City’s policy goals.” Ultimately, the court held that there was no set of circumstances under which this type of payout obligation would be valid, and so it did not reach the issue of what particular relocation payment threshold imposed a “prohibitive price.”

The court also cautioned that the procedures enacted by the City for landlords to challenge assessed relocation payments might themselves constitute a “prohibitive price” because they “appear to delay the ability of landowners availing themselves of these procedures to leave the rental business and cloud their exits with uncertainty.”

Public Employees’ Personal E-mail and Text Messages May be Subject to Disclosure under the Public Records Act

The California Supreme Court has held that information relevant to public business contained in emails or text messages stored on private electronic devices of government officials is subject to disclosure under the Public Records Act. City of San Jose v. Superior Court (Smith), No. S218066 (Calif. Supreme Court, March 3, 2017).

The California Public Records Act (Government Code sections 6250 et seq.) establishes a presumptive right of access to any records created or maintained by government agencies that relate to the public’s business. Every such record must be disclosed unless a statutory exception is shown. The Act sets out a variety of exemptions, many of which are designed to protect individual privacy, and also includes a catchall provision exempting disclosure if “the public interest served by not disclosing the record clearly outweighs the public interest served by disclosure.”

City hall of San Jose, California, USA

City Hall, San Jose, California

The Act was adopted in 1968, long before the Legislature could have envisioned that public agencies would communicate via cell phones and e-mail. Over the last two decades, agencies have almost uniformly maintained that communications sent or received by a public official on a personal account (e.g., a cell phone or e-mail account) are private, not public, records and hence are not subject to disclosure under the Act. The City of San Jose offered this same response to a Public Records Act request by a member of the public (Smith) who requested emails and text messages “sent or received on private electronic devices used by” the mayor, members of the City Council, and their staffs.

The California Supreme Court ruled unanimously that the requested records were subject to disclosure under the Act. At the outset, the court rejected the blanket notion that records generated or retained on personal accounts are not subject to the Public Records Act. Citing both the constitutional policy favoring broad access to records involving the public’s business and the clear legislative intent of the Act, the court held that the right to inspect public records cannot be thwarted simply because such records are not created or maintained on a governmental account. However, the court carefully characterized the decision as involving only the “narrow” legal issue of whether writings concerning public business are beyond the scope of the Act “merely because they were sent or received using a nongovernmental account.”

The court recognized the difficulty in determining whether particular e-mails or text messages from non-governmental accounts are sufficiently related to the public’s business to fall within the scope of the Act. For example, the court noted that “depending on context, an email to a spouse complaining ‘my coworker is an idiot’ would likely not be a public record,” but an “an email to a superior reporting the coworker’s mismanagement of an agency project might well be.” The court eschewed adoption of a general rule, stating that these communications should examined in light of several factors, including “the content itself; the context in, or purpose for which it was written; the audience to whom it was directed; and whether the writing was prepared by an employee acting or purporting to act within the scope of his or her employment.”

In addition to these factors, the court advised that communications that include “no more than incidental mentions of agency business generally will not constitute public records.” The court was wary of the effect of its decision on the privacy of public officials and staff, and emphasized that the Act’s exemptions from disclosure would apply to any writings from personal accounts, and that purely private information not otherwise subject to disclosure can be redacted.

Finally, the Court provided guidance to agencies on how to conduct record searches involving personal accounts. Observing that agencies were free to develop their own internal policies for records searches, the court recommended that such policies incorporate two features: (1) requests for records should be communicated to employees, and agencies should then “reasonably rely” on employees to search their own accounts and devices for responsive material; and (2) agencies should adopt policies designed to reduce the likelihood of public records being contained in private accounts.

While City of San Jose settles the broad legal question of the applicability of the Act to personal accounts, it leaves much to be determined. Whether a given communication on a private device is sufficiently connected to public business to be subject to disclosure depends, according to the court, entirely on content and context. The court declined to establish any kind of “safe harbor” rule for public agencies that adopt and implement policies for records searches, stating that the question whether the content of specific communications renders them subject to disclosure must “await resolution in future proceedings.”

U.S. Fish & Wildlife Service Adopts 30-Year Eagle Take Rule

As we previously reported, in August 2015, a federal court nullified the U.S. Fish and Wildlife Service’s rule increasing the length of programmatic permits to “take” bald and golden eagles to 30 years. The court held that the Service was required to prepare an Environmental Impact Statement or Environmental Assessment before adopting the rule. The Service subsequently prepared a draft programmatic EIS (available here) and has now formally approved the 30-year eagle take rule. The rule allows renewable energy companies and other large project developers to obtain a 30-year permit (as opposed to the previous five-year permit) for the incidental take of bald and golden eagles. In exchange, permittees must commit to detailed mitigation and conservation measures aimed at better understanding and reducing impacts to bald and golden eagles. See 81 Fed. Reg. 91,494 (Dec. 16, 2016).  Our full Update on the rule, by Don Bauer, Laura Godfrey Zagar and Anne Beaumont is available here.

Bald eagle soars in the clouds

Initiative petition must include full text of every provision enacted into law

The Court of Appeal has held that because the proponents of an initiative failed to include the full text of the proposed initiative in the petition, the petition violated Elections Code section 9101 and was therefore invalid. Wilson v. County of Napa, 9 Cal.App.5th 178 (2017)

Proponents filed an initiative petition with the Napa County registrar entitled  “Water, Forest and Oak Woodland Protection Initiative of 2016.” The petition was 18 pages long and consisted of ten sections. Among the sections was a provision to be added to the Napa County Code establishing an “Oak Removal Permit Program.” The new code section would have required a permit for the removal of certain oak trees. The permit application had to include a remediation plan that “at a minimum” was in compliance with the best management practices set forth in an appendix to the Napa County Voluntary Oak Woodland Management Plan. The initiative petition did not contain the referenced appendix or provide its relevant text.

After seeking advice from counsel for the County, the registrar of voters rejected the petition on the ground that it did not comply with the full text requirement of Elections Code section 9101. The measure’s proponents sought a writ of mandate in superior court to compel the registrar to place the measure on the ballot. The superior court denied the writ petition on the ground that the initiative would enact into binding law the best management practices in the appendix to the Napa County Voluntary Oak Woodland Management Plan. Accordingly, the initiative did not contain “the full and complete text of everything that will be enacted if the voters approve it as required by Elections Code section 9101.”

The Court of Appeal affirmed, holding that the petition was defective because the initiative’s incorporation by reference of the management plan was not merely a cross-reference to an existing law, but rather the conversion of what were voluntary or recommended management practices into mandatory and legally binding obligations. The omission of the management practices that would be compelled therefore frustrated the purpose of the full-text requirement, which is to “provide sufficient information so that voters can intelligently evaluate whether to sign the initiative petition and avoid confusion.” While the general rule requires substantial compliance with the Code, and technical deficiencies will not invalidate a petition, substantial compliance is not sufficient where the defect frustrates the purpose of the full text requirement. Here, the obligation of a permit applicants to comply with management practices that were not spelled out in the petition or attached to it frustrated the purpose of the full text requirement.

Local election over Walmart project invalidated for violation of the Brown Act

The court of appeal has overturned a local initiative because the City Council failed to agendize its consideration of Walmart’s offer to fund election costs. The court also determined that the initiative measure did not run afoul of the constitutional prohibition against naming or benefitting a corporation, since it applied to any developer of the subject property, not just Walmart.  Hernandez v. Town of Apple Valley (No. E063721, Jan. 5, 2017).

The case concerned an initiative measure in the Town of Apple Valley intended to facilitate a Walmart project. The measure proposed to amend or adopt a Specific Plan to provide for retail development.  The proposed development would have included a Walmart store. Proponents of the development project submitted an initiative petition to the Town, which contained sufficient valid signatures to qualify for a special election.

Brown Act Issue.

Town staff placed an item on the agenda for an upcoming Council hearing regarding the “Wal-Mart Initiative Measure.” At the meeting, the Council voted to place the measure on the ballot and call a special election. However, at the same meeting, the Council also considered and acted on a Memorandum of Understanding that was not mentioned on the agenda. The MOU allowed the Town to accept a gift from Walmart to pay for the special election.  A citizen, Gabriel Hernandez, notified the town of his claim that this action violated the Brown Act, but the town declined to cure.  Hernandez then sued.  The voters subsequently approved the initiative measure.

The court ruled that the Town Council action taken on the MOU violated the Brown Act.  The remedy, however, was surprising. Rather than invalidating the MOU, the court held that the Town’s action in putting the initiative on the ballot was null and void. The court found that it was “conceivable [the funding] was a major factor in the decision to send the matter to the electorate.” The court did not explain how its remedy was consistent with the ministerial duty imposed on the Council by the Elections Code to schedule an election within a certain number of days after initiative petition signatures are verified. Nor did it address caselaw indicating that post-election procedural challenges to initiatives are generally mooted out by the election. Instead, the court simply ruled that the Brown Act violation invalidated the special election held four years earlier.

Initiative Benefiting Private Developer.

The court also addressed the validity of the contents of the initiative based on the likelihood that the Town would again consider the Walmart initiative.

Article II, section 12 of the California Constitution provides that “No amendment to the Constitution, and no statute proposed to the electors by the Legislature or by initiative, that names any individual or any office, or names or identifies any private corporation to perform any function or to have any power or duty, may be submitted to the electors or have any effect.”  The Walmart initiative did not expressly name Walmart, but it referenced the obligations of “developer” and defined “developer” as “any individual or other entity proposing any development within the Specific Plan area.”

The court agreed with the plaintiff that Walmart, as developer, would be responsible for the actions specified in the initiative.  The court recognized, however, that if Walmart sold the property, or decided not to develop, it would have no rights under the initiative.  Accordingly, the initiative did not assign power to Walmart per se, but only to any developer of the property. Moreover, the court found that plaintiff’s argument would lead to the absurd conclusion that any land-use initiative involving a private project would be invalid, since an initiative opponent would need to establish only that a specific company intended to develop the property or owned the property to invalidate it.

The court thus concluded that the initiative’s imposition of obligations on “developer” did not did not constitute a violation of the constitutional prohibition against benefitting a private corporation.



A Summary Of Published Appellate Opinions Under The California Environmental Quality Act

In 2016, the California appellate courts issued published opinions in 21 CEQA cases. In several of those opinions, including a ground-breaking decision by the California Supreme Court, the courts grappled with limits on the scope of required environmental review for a subsequent project approval after a negative declaration or EIR has previously been adopted or certified for the project. Other key decisions addressed emergent questions regarding the requirements for analyzing the impacts of greenhouse gas emissions and energy use, as well as mitigation of those impacts.

Courts also considered the boundaries of CEQA’s reach, one finding that CEQA is not concerned with the social and psychological effects of a change in community character, and another confirming that CEQA generally applies to a project’s effects on the environment, not to the environment’s impacts on a project. And in a controversial decision that may have far-reaching implications, an appellate court found an EIR deficient because it did not provide evidence supporting its use of policies from the agency’s general plan as standards of significance.


California Supreme Court Rejects City’s Attempt To “Evade” General Plan Amendment Referendum

The California Supreme Court has unanimously denied an effort by the City of Orange to defend its approvals for a residential development project despite an intervening public vote that rejected a general plan amendment the city had passed to advance the project. By later attempting to make an “administrative correction” to its general plan, the court held, the city improperly sought “to evade the effect of the referendum petition.” Orange Citizens for Parks and Recreation v. Superior Court, No. S212800 (Dec. 15, 2016).

A close up look at a courthouse or government building with lots of copy space to the right

To resolve the case, the court was forced to grapple with the convoluted planning history underlying an open space tract recently approved for development as 39 residential units. In 1973, the city council adopted a specific plan that designated the property as open space, but also passed a resolution upholding the “recommendation of the Planning Commission” to designate the property as open space and low-density housing, not solely as open space. However, conforming revisions were not made to the specific plan. In 2010, the city adopted a new general plan that designated the project site as open space. The 2010 general plan stated that specific plans, including the 1973 plan, must be consistent with general plan land use policies.

The city council later approved the developer’s request to amend the general plan to allow housing on the property. Shortly thereafter, project opponents challenged the amendment by referendum. In response, the city “changed course” and argued there was no need to amend the general plan to approve the project because the 1973 resolution adopting the Planning Commission recommendation permitted residential development on the property. The city concluded, accordingly, that a successful referendum of its action amending the general plan would have no effect. The voters went on to reject the general plan amendment, and in ensuing litigation the courts were asked to determine whether an amendment was required to authorize the project.

The California Supreme Court said it was. The court determined that the city council conditioned its finding that the housing project was consistent with the general plan on the general plan amendment later rejected by voters. Nevertheless, the court continued, even if it were to assume the city had found the project consistent with the un-amended 2010 general plan, the court would not defer to the city’s finding. The court rejected the city’s argument that the specific plan had designated the property as open space and low-density housing. The 1973 planning commission recommendation to adopt this designation “never became integrated into the publicly available [specific] plan, let alone the 2010 General Plan.” Rather, the court stated, the 2010 general plan land use element gave the project site “an unambiguous designation” as open space, and the publicly available specific plan designated the property similarly.

Citing case law and Perkins Coie’s California Land Use and Planning Law treatise, the court concluded that the 2010 general plan land use designation had not informed the public that the property would be subject to residential development. The proposed general plan amendment, in contrast, did so, but was rejected by the citizenry. The city was not then permitted to conform its 2010 general plan to the 1973 planning commission recommendation through an “unreasonable” correction.

City Does Not Have Burden of Showing Reasonableness of Housing Fees

Just over a year after the California Supreme Court strongly endorsed inclusionary housing ordinances, the Second District Court of Appeal upheld a city’s collection of in-lieu housing fees against a developer’s claim that the city failed to carry its burden of proving the fees were reasonably related to development impacts.  616 Croft Ave., LLC v. City of West Hollywood, No. B266660 (Second Dist. Sept. 23, 2016)

Last year, in California Building Industry Association v. City of San Jose, 61 Cal. 4th 435 (2015), the California Supreme Court ruled that inclusionary housing ordinances are legally permissible as long as it can be shown an ordinance is reasonably related to the public welfare.  The court rejected a claim that a city may impose inclusionary housing requirements on new residential development projects only if it first shows that the need for affordable housing is attributable to new development.  (Our full report on the state supreme court decision is available here.)

The court of appeal recently applied the California Supreme Court ruling to deny a challenge to the City of West Hollywood’s collection of fees for inclusionary housing.  The city requires developers of for-sale residential projects with 10 or fewer units either to sell a portion of the newly constructed units at below-market rates or, alternatively, to pay an in-lieu fee designed to fund construction of an equivalent number of affordable units.

The city conditioned approval of a developer’s condominium project on payment of in-lieu fees.  The developer paid the required fees under protest and filed suit.

New construction of a house in the Mueller neighborhood in Austin, TX

Citing extensively from the California Supreme Court decision, the court of appeal rejected the developer’s claim that the city had the burden of proving the fees were “reasonably related” to the deleterious impact of the development.  The court held that the validity of in-lieu fees, as an alternative to an on-site inclusionary housing requirement, does not depend on whether the fees collected from a developer are reasonably related to that development’s impact on a city’s affordable housing need.  Rather, like an on-site requirement, in-lieu fees only must be reasonably related to the overall availability of affordable housing, and the challenger must show the fee schedule was invalid, an effort the developer here did not undertake.