Court Affirms Housing Applicants' Ability to Be Vested Against Downzonings

O'Brien Land Company's more than a decade-long odyssey to build 315 zoning-compliant homes – chronicled in Conor Dougherty's book Golden Gates: Fighting for Housing in America – has become the stuff of housing law legend, responsible in large part for the birth of the current "Yes in My Backyard" (YIMBY) pro-housing movement. Now, the battle has also yielded an important new partially published California Court of Appeal opinion, Save Lafayette v. City of Lafayette, which affirms that housing projects are entitled to be processed on the basis of the zoning in effect at the time of application completeness – and are vested against later-adopted downzonings.¹ The Court of Appeal denied a request for rehearing on Dec. 16, 2022, and so the opinion will become a final published opinion unless reviewed by the California Supreme Court.

Background

In 2011, O'Brien submitted an application for a 315-home, mixed-income housing development (Project) in the City of Lafayette, California (City). Because California's Housing Accountability Act (HAA) limits local governments to apply only general plan and zoning standards "in effect at the time the application is deemed complete,"² the City was required to process the application under the standards in effect at the time it accepted the application as complete in July 2011. The City certified an Environmental Impact Report (EIR) for the Project in 2013.

Although the Project was designed to conform to the City's adopted General Plan and zoning standards, housing opponents Save Lafayette used every means imaginable to try to kill the Project. In an attempt to placate this opposition, O'Brien agreed to suspend its 2011 application and pursue a downsized 45-home alternative project – while at the same time expressly invoking its rights to reinstate the Project and invoke its rights under the HAA if the smaller project were also challenged. In 2015, the City approved the downsized project and adopted a substantial downzoning of the Project site. Not satisfied with reducing a 315-home multifamily project to just 45 single-family homes, Save Lafayette then sued the City for approving the smaller project and circulated referendum petitions to pursue its own preferences for the property. Meanwhile, YIMBY pro-housing activists brought their own suit challenging the City's decision to downsize the Project.

After facing opposition from both fronts in the housing wars, in 2018 O'Brien invoked its right to reinstate the 315-home Project. In 2019, with attitudes toward housing changing statewide, the City approved the Project, preparing an addendum to the EIR it had previously certified for the Project in 2013. Yet again, Save Lafayette sued, bringing land use and California Environmental Quality Act (CEQA) claims seeking to set aside the City's decision to approve the Project. The Superior Court rejected both claims, and Save Lafayette appealed.

Court of Appeal Opinion

Save Lafayette's primary argument was that the Project conflicted with the General Plan and zoning standards that took effect after the Project site was downzoned in 2015. But the HAA's express language states that the City was required to apply only the higher-density standards in effect when O'Brien's application was deemed complete in 2011. To get around this, Save Lafayette attempted to enlist an unlikely statutory ally in the effort to stop development: the Permit Streamlining Act (PSA), a law intended to streamline the approval of development projects.

To try to induce prompt action on development projects, the PSA establishes a deadline for cities to approve or disapprove a development project within 180 days of certifying an EIR for the project. From this, Save Lafayette argued that if a city fails to approve a project within the 180-day period following EIR certification, the application expires and the applicant loses any vested rights to which it would otherwise be entitled. But nothing in the PSA states this. In a published opinion, the Court of Appeal rejected Save Lafayette's request to read this or any other limitation into the HAA's clear requirement that housing projects are vested against later-adopted downzonings. To the contrary, the Court of Appeal specifically noted that the PSA must not be interpreted in a "vacuum," but rather in relation to the HAA.³ Relying especially upon 2021's California Renters Legal Advocacy and Education Fund, which Holland & Knight briefed and argued on appeal, the Court emphasized the importance of interpreting and implementing the HAA to "afford the fullest possible weight to the interest of, and the approval and provision of, housing."⁴

In the unpublished portion of its opinion, the Court also rejected Save Lafayette's CEQA claims, reaffirming that preparing an addendum to a previously certified EIR can be a very defensible CEQA compliance pathway.

Conclusions and Takeaways

The opinion is most notable for affirming the HAA's provisions allowing developers to be vested against later-adopted downzonings – even in the relatively extreme situation in which project approval ultimately comes seven years after application completeness. Subsequent statutory amendments make the practice of "locking in" applicable zoning and General Plan standards an even more important part of the housing entitlement process. At the time of O'Brien's application, a housing applicant could access its vested rights under the HAA only if a locality agreed that the applicant had submitted a complete application (or if a locality failed to timely contend to the contrary). However, after the enactment of the Housing Crisis Act in 2019, the HAA and the PSA have both been amended to allow housing developers to access this same right to be vested against downzonings by submitting a "preliminary application," which the locality has no discretion to refuse to accept as long as it contains the specific material required by statute and as long as a complete planning application is later submitted within 180 days.

The opinion also continues an important judicial trend – especially in the First District Court of Appeal, with jurisdiction over 12 Northern California counties – of enforcing and applying state housing production laws with an eye toward effectuating the Legislature's intent of meaningfully limiting the ability of local opposition to block much-needed new housing.

Of course, the fact that a zoning-compliant housing development is only now seeing the light at the end of the tunnel after 11 years of public process is probably more salient than any other fact discussed in the Save Lafayette opinion. Notably, the Save Lafayette opinion provides an important new tool to help ensure that future housing projects need not suffer similarly onerous pathways to approval.

Notes

¹ Save Lafayette v. City of Lafayette (Nov. 30, 2022, No. A164394) ___Cal.App.5th___ [2022 Cal. App. LEXIS 979; 2022 WL 17336106].

² Gov. Code, § 65589.5, subd. (j)(1).

³ Save Lafayette, slip op. at 14-15, citing Gov. Code, § 65589.5, subd. (a)(2)(L).

⁴ Ibid., slip op. at 12, citing California Renters Legal Advocacy and Education Fund v. City of San Mateo (2021) 68 Cal.App.5th 820, 836 and Gov. Code, § 65589.5, subd. (a)(2)(L).

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