California Court Exempts Housing Developers From Local Limits

California Court Exempts Housing Developers From Local Limits

NEWS FLASH: A California court exempts housing developers from local limits. What does this mean? Here’s an explanation.

California developers including affordable housing units in their projects receive exemptions from local limits on density, height, and zoning.

 

KEY TAKEAWAYS

• On February 3, 2022, the California Court of Appeals made a precedent ruling making local governments exempt housing developers from strict zoning height and density limits.
• All a California developer needs to do is to propose specific affordable low-income housing units in the project to qualify for the exemption.
• The court allowed 9% of the total housing units as designated affordable low-income units. In return for a 40% increase in the total housing units which includes greater height for the extra units.
• This opens the door for more California housing developments.
• Learn how this new ruling came about and how housing developers can take advantage of it.

 

The Associated Press (AP) reported on February 3, 2022, that a California Appeals Court ruling can make an “immense impact” on local zoning limits.

The Fourth District Court of Appeals (4DCA) relied on a 1979 California Density Bonus Law. It requires local governments to approve permits and waive development standards conflicting with builders committed to providing low-income housing units in their projects.

The Appeals Court ruled 3 to 0 favoring the San Diego developer. When announcing its ruling, Justice Judith Haller clearly stated:

“Once the developer commits to making a specified portion of the project affordable to lower-income households, Local governments must allow increased building density, grant permits, and waive any conflicting local development standards unless certain limited exceptions apply.”

Yes, exceptions exist. According to the San Francisco Chronicle, these exceptions include “threats to safety or public health, or harming historic resources or conflicting with federal or state laws”.

 

Explanation of the New California Appeals Court Ruling in Favor of Developers 2022

 

The above description with quotes can be confusing. Let’s make it simpler.

California developers can get exemptions from local strict limits on zoning including height and density by including affordable lower-income housing units.

This means that all a California developer needs to do is to include some affordable housing units in a project to bypass strict local limits on its height and density.

For example, just below you will read that the Court of Appeals allowed a building limited to 147 housing units to increase to 204 units by promising 18 affordable units. That’s an increase of almost 40%. The 18 affordable units amount to only 9% of the total units,

So, the new court ruling allows developers to propose 9% affordable housing units to increase a project by 40%. Now that’s making a huge profit.  

 

History of California Court Exempts Housing Developers From Local Limits

 

It Started in San Diego

The facts of this important court ruling began in San Diego when the city approved a plan to build a 20-story mixed-use building near Balboa Park. The approved plan allowed more than 25% height over the current local height standards. Also, it approved 204 housing units instead of a 147 units’ limit. The approval was based on the developer’s promise to include 18 affordable units.

Local opposition filed a lawsuit to stop it which was resolved in early February. The Bankers Hill Community Group and the Parkwest Homeowners Association vows to appeal to the California Supreme Court.

According to U.S. News, a movement by opponents seeks to gather enough signatures for a statewide ballot initiative in November to restore local control.

Meanwhile, this court ruling is precedent allowing California courts to follow it unless overturned by the California Supreme Court or a statewide initiative.

California Developers versus Local Governments

 

This case demonstrates the many clashes which occur across California about local control over property developments.

The current statewide housing crisis inspired the state government to enact laws to force local governments to approve the development of more housing units. Read about some of these new California laws in our recent posts:

• How to Develop 28,500 Lots in San Diego County in 2022;
• San Diego Housing Laws: Top Changes 2022; and
• San Diego New Rental Laws You Should Know 2022

 

Also, SoCal Lifestyle Realty published an informative blog post explaining the new SB 9 law in greater detail titled:

“How Californians Can Build Duplexes on One Lot in 2022”.

Supporters of increased statewide housing claim that local governments favored single-family homes while limiting large housing projects over the past decades.

The California Building Industry Association (CBIA) claims local governments erected all types of obstacles to prevent new housing construction. Thus, creating the current statewide housing shortage crisis.

Some experts assert that up to 3 million new housing units are needed in the next few years to make up for the housing shortfall.

In 2021, Governor Gavin Newsom signed two laws designed to help build more housing by side-stepping local zoning ordinances limiting housing development. These laws included:

SB 9 – Senate Bill 9 requiring local governments to approve single-family lot developments up to four housing units

SB 10 – Senate Bill 10 permits local governments to allow up to 10 housing units developments by rezoning neighborhoods close to mass transit.

 

New Housing Development Opportunities in California

 

Even with these new laws, California still has a long way to go to increase housing with 3 million new units. Here is what the near future holds:

• Expect more favorable housing development laws in California over the next few years;
• Thus, it’s the perfect time to get involved with California future housing projects; and
• Take advantage of the new California Appeals Court ruling in 2022 in case the Supreme Court overturns it in 2023 or a statewide initiative passes and takes effect in 2023.

 

What if the California State Supreme Court or a Statewide Initiative Overturns the Court of Appeals Ruling?

 

If the California State Supreme Court decides to accept an appeal from the Court of Appeals ruling, it won’t be heard until 2023.

Likewise, with the proposed statewide initiative to give local governments the power to reverse the same ruling. A November statewide ballot initiative if passed will not go into effect until 2023.

Yet, if you obtain your development permits in 2022 these two events will not stop construction under the legal doctrine that prohibits “Retroactive” laws. This occurs when a new law or court ruling; or a new statewide initiative “imposes liability on individuals (or legal entities) for prior acts”.

The Fifth Amendment of the U.S. Constitution called the “Due Process” clause prohibits new laws from holding past actions based on the old laws liable. For example, if it was legal to get a construction permit in 2022 it can’t be declared illegal by a new law taking effect in 2023.

Another important legal precedent is “Stare Decisis”. This legal doctrine is Latin for “letting prior decisions stand”. Thus, legal acts in 2022 can’t be overturned by a new law making them illegal.

 

Invest in New California Housing Now

If you are thinking about investing in properties in San Diego County now is the time to contact an experienced San Diego Realtor.

SoCal Lifestyle Realty provides the experience local San Diego Realtors you need to locate good opportunities for housing investments throughout San Diego County.

Contact them now to learn what housing investment opportunities are waiting for you.

 

California Court Exempts Housing Developers From Local Limits – Conclusion

 

California developers just need to include a few affordable housing units in their projects to receive exemptions from local limits on density, height, and zoning.

That’s right, a recent California appeals court allowed a developer who offered 9% of the total housing units as affordable low-income units to get an extra 40% increase in units. The court agreed with the City of San Diego who allowed exemptions from their zoning height and density limits in return for 9% affordable housing units.

Since this is a “precedent” appeals court ruling it is now law throughout California.

However, it can be overturned in 2023 by the California Supreme Court. Or, by a proposed statewide ballot initiative in November if passed becoming law in 2023. Yet, those acts will not become law until 2023 making it impossible to overturn construction permits granted in 2022.

 

Need Help Managing All Your New Housing Units in San Diego County?

 

WeLease Property Management Company offers experienced professional management services for all your needs. These include advising you about rental pricing, advertising for new tenants, showing units, screening tenants, signing them to leases, and more.

Contact us to learn more about housing investing in San Diego County and managing your new tenants to save you time and money.

 

Steven Rich, MBA – Guest Blogger

 

 

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