Development Agreements Cannot Be Adopted By Initiative

A development agreement cannot be adopted by initiative, the California court of appeal ruled in Center for Community Action and Environmental Justice v. City of Moreno Valley, 26 Cal. App. 5th 689 (2018).

The Development Agreement Statute

The Development Agreement Statute (Government Code sections 65864–65869.5) allows a municipal government and a property owner to enter into a contract that vests development rights by freezing the land use regulations applicable to a property. The statute includes procedural and substantive requirements for development agreements, including that “[a] development agreement is a legislative act that shall be approved by ordinance and is subject to referendum.” (Government Code section 65867.5(a).)


The project at issue in this case was a proposed logistics center in Moreno Valley. In 2015, the Moreno Valley City Council approved project entitlements, including a development agreement. Opponents then filed a CEQA lawsuit to challenge the environmental impact report for the project. A group backed by the developer responded by filing a petition for an initiative that would repeal the development agreement ordinance and approve a new development agreement. The initiative development agreement was substantially the same as the agreement the City Council approved for the project. The City Council adopted the initiative, rather than submitting it to the voters. Because voter-sponsored initiatives are not subject to CEQA, no environmental review was completed before the City Council adopted the initiative. Opponents then filed this lawsuit, asserting that a development agreement cannot be adopted by initiative.

The Court’s Decision

Based on the statutory language, statutory scheme, and legislative history, the court determined that the Development Agreement Statute did not permit adoption of a development agreement by initiative. Continue Reading

Ban on Short-Term Home Rentals Is a “Development” Subject to the Coastal Act

Underlining the broad and expansive definition of “development” under the California Coastal Act, the Second Appellate District ruled that a coastal homeowners’ association’s ban on short-term rentals is considered “development” subject to the requirements of the Coastal Act. Greenfield v. Mandalay Shores Community Association, 21 Cal. App. 5th (2018)

The Mandalay Shores Community Association is the homeowners’ association for 1,400 residences in a beach community within the City of Oxnard coastal zone. Increasingly concerned about the parking, noise and trash problems caused by short term rentals, the Association adopted a resolution barring home rentals for fewer than 30 consecutive days. Owners who violated the ban would be fined by the Association: $1,000 for the first offense, $2,500 for the second, and $5,000 for each subsequent offense.

A Coastal Commission enforcement supervisor advised the Association that its ban on short term rentals constituted a “development” under the Coastal Act which required a coastal development permit. The plaintiffs, owners of a home in Mandalay Shores, then sued the Association to prevent enforcement of the ban, asserting it violated the Coastal Act.

The trial court denied the plaintiffs’ motion for a preliminary injunction, ruling that the Association’s ban on short term rentals was not a “development” under the Coastal Act.

The court of appeal reversed the trial court judgment, ruling that it had not correctly construed the Coastal Act. The court stated that, because a key goal of the Coastal Act is to maximize public access, “development” is broadly defined to include changes in density or intensity of use of land, and not just alterations of land or water. For example, the court explained, locking a gate that is usually open for public beach access over private land, or posting a “no trespassing” sign on a parcel used for beach access, are both “developments” because they have a significant adverse impact on public use of coastal resources.

Similarly, the court reasoned, preventing non-residents from vacationing—as they had for decades—at Mandalay Shores through the short-term rental of beach homes created a “monetary barrier to the beach.” The Association’s ban was therefore a “development” subject to the provisions of the Coastal Act. The question of whether short-term rentals should be regulated or banned would need to be decided by the Coastal Commission and the City of Oxnard, not a private homeowner’s association.

The appellate court ordered the trial court to grant the plaintiffs’ motion for a preliminary injunction, thereby preventing continued enforcement of the Association’s ban on short-term rentals.

Negative Declaration Survives Challenge Based on Non-Expert Opinion About Noise Impacts

Claims of significant noise impact unsupported by expert opinion, fact, or reasonable inference did not provide grounds for challenging a negative declaration, the court of appeal held in Jensen v. City of Santa Rosa, 23 Cal. App. 5th 877 (2018).

The project, called the Dream Center, would provide emergency shelter for homeless youth and transitional housing for young adults, as well as counseling, health, education, and job placement services. The center would also provide outdoor recreational activities for residents, including a basketball area, pottery throwing area, and garden. The center would occupy a vacant building formerly used as a hospital. A wooden fence and landscaping separated the rear parking lot from an adjacent residential neighborhood.

The City of Santa Rosa adopted a negative declaration and approved a rezoning and conditional use permit for the project. Conditions of approval limited parking in the rear lot to employees during normal operating hours. The city’s negative declaration relied on a noise study prepared by an engineering firm. The noise study concluded that noise impacts would be less than significant because noise would not exceed standards in the city’s general plan or noise ordinance, and would not increase noise levels more than 5 dBA Ldn above existing conditions. (Ldn is the average day/night noise level.)

The petitioners, who lived near the project, asserted there was a fair argument the project would cause significant noise impacts from vehicles in the rear parking lot and from outdoor recreation activities. The petitioners based their main arguments on their own calculations using data taken from a noise study for a different project in the city called Tower Market, a 24-hour convenience store and gas station.

The court held that no substantial evidence supported the petitioners’ claims. Continue Reading

Governor Signs Bill Extending the Life of Building Permits to One Year

Governor Brown has signed AB 2913 (Wood), which amends current law to extend the duration of building permits from six months to one year.

Under current law, a building permit is subject to the state Building Standards Code as well as any local ordinances in effect at the time the application for the building permit is submitted. The building permit is valid for six months, and expires automatically unless construction has commenced within that period or the permit is extended by the local jurisdiction under local codes (which is generally a discretionary decision and, in some jurisdictions, is not authorized at all under local law). If the permit expires without an extension, the builder must obtain a new permit, which is subject to any changes in the building code or local ordinances since issuance of the original permit, and may require costly changes in design and payment of additional permit fees.

AB 2913 extends the expiration date of building permits from six to twelve months. It also provides express statutory authorization to the local building official to grant one or more extensions for periods of up to 180 days per extension upon a showing a justifiable cause by the applicant.

Applicant Challenging Denial of Use Permit Must Prove It Is Legally Entitled to Permit

In an unsurprising decision, the Second District Court of Appeal upheld Ventura County’s decision to a deny a use permit that would allow tigers to be kept on property located within a half-mile of a residential area. Hauser v. Ventura County Board of Supervisors, 20 Cal.App.5th 572 (2018).

Background. Plaintiff Irena Hauser applied for a conditional use permit that would allow five tigers to be kept on a 19-acre parcel in an unincorporated area of Ventura County. The proposed project would include several tiger enclosures and an arena within a seven-acre area surrounded by a chain link fence. The plaintiff planned to use the tigers in the entertainment business and transport them for that purpose up to 60 times per year.

Neighbors strongly opposed the project and presented a petition to the county which contained roughly 11,000 signatures in opposition.  The planning commission denied the permit application, and on appeal, the board of supervisors did the same, finding the plaintiff failed to prove two elements necessary for a use permit: that the project was compatible with the planned uses in the general area, and that it was not detrimental to the public interest, health, safety or welfare.

The Court of Appeal’s Decision. The court of appeal upheld the trial court’s decision rejecting the plaintiff’s challenge. The court first explained that, as the permit applicant, the plaintiff had the burden to show she was legally entitled to a use permit. She had, however, failed to persuade the board of supervisors that the requirements for a use permit were met. In passing, the court stated that the board’s determination that the requirements were not met did not have to be supported by substantial evidence because it is the absence of evidence of sufficient weight and credibility to convince the trier of fact that leads to that conclusion. Nevertheless, the court undertook a thorough review of the record and found that the board’s decision was amply supported by substantial evidence. Continue Reading

Power Plant Licensing Case May Open Door to Expanded Judicial Review of Licensing Decisions

In Communities for a Better Environment v. State Energy Resources Conservation and Development Commission, 19 Cal. App. 5th 725 (2017), the First District Court of Appeal reversed the trial court’s conclusion that a challenge to the constitutionality of California’s process for judicial review of decisions of the State Energy Resources Conservation and Development Commission (Energy Commission) was not ripe. The practical effect of this decision may be to increase the difficulty in permitting and financing large, non-renewable power plants in California.

The Energy Commission has exclusive authority to license thermal power plants over 50 megawatts, “in lieu of any permit, certificate, or similar document required by any state, local or regional agency, or federal agency to the extent permitted by federal law.” Under Section 25531 of the Public Resources Code, decisions of the Energy Commission are reviewable only by the Supreme Court of California, and the Commission’s factual findings “are final and are not subject to review.” Review by the Supreme Court is discretionary and, in practice, the high court has summarily denied every challenge to an Energy Commission power plant licensing decision since energy deregulation in California in the 1990s. Continue Reading

Major Changes Proposed to Endangered Species Act Regulations

The U.S. Fish and Wildlife Service and National Marine Fisheries Service recently published three proposed rules that would make major revisions to the regulations implementing portions of the Endangered Species Act. The proposed rules would change the criteria and procedures for (1) establishing protections for “threatened” species; (2) the listing and delisting of species and the designation of critical habitat; and (3) the interagency consultation process under Section 7 of the Endangered Species Act, which is used to determine whether a federal action would jeopardize a listed species’ continued existence or result in an adverse modification of the species’ designated critical habitat. Our complete report on the proposed changes, by Donald Baur, Marc R. Bruner, William G. Malley, Bradley H. Oliphant and Laura Godfrey Zagar is available here.

Significant Changes Proposed to NEPA Regulations

The Council on Environmental Quality (CEQ) has issued a notice of proposed rulemaking regarding potential changes to the CEQ regulations under the National Environmental Policy Act. The proposed revisions to the CEQ regulations could potentially have far-reaching effects because NEPA requirements are largely defined in the regulations themselves, which have remained essentially unchanged for nearly 40 years. The current deadline to submit comments is July 20, 2018, but it is likely that CEQ will receive and grant requests to extend the comment period. Our Update discussing the potential changes to the regulations, by Bill Malley, Laura Zagar, Chris Chou and Jacob Aronson, is available here.

Court Rejects Interpretation of Medical Marijuana Collective as a “Medical Office” under City’s Zoning Code

The Sixth District Court of Appeal has held that a medical marijuana collective is not a “medical office” as defined in San Jose’s Municipal Code. J. Arthur Properties, II, LLC v. City of San Jose, 21 Cal. App. 5th 480 (2018)

Plaintiffs opened a medical marijuana collective in 2010 at a site zoned Commercial Office. At the time, San Jose’s Municipal Code did not regulate any type of marijuana-specific uses and allowed medical offices in Commercial Office zoning areas. The City Council amended the Municipal Code in 2014 to regulate and permit medical marijuana uses in certain industrial zoning area but not in Commercial Office areas. Plaintiffs received a compliance order in 2014 stating that medical marijuana collectives were not permitted in Commercial Office zoning areas, effectively requiring them to discontinue their business at the site.

Plaintiffs sued, contending that their marijuana collective should continue to be allowed as a legal, nonconforming use. The Sixth District Court of Appeal disagreed. San Jose’s Municipal Code defines medical office as “offices of doctors, dentists, chiropractors, physical therapists, acupuncturists, optometrists, and similar health related occupations, where patients visit on a daily basis.” Plaintiffs argued that medical marijuana collectives should be considered medical offices because they provide a medical and health-related service. The court declined this broad interpretation, observing that medical marijuana collectives did not fall under any of the enumerated uses listed in the definition and that a medical marijuana collective is not a “similar health related occupation.” Emphasizing that the enumerated uses typically involve the on-site treatment of patients by a physician or other professional, the court found no evidence that medical marijuana collectives provided a similar service. Instead, “members of collectives are patients of the physicians who prescribed marijuana.”

Accordingly, the court held that the collective had never been a permitted use to begin with and hence could not be a legal nonconforming use.


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. Continue Reading