by William W. Abbott and William V.W. Moore

In 2002 the Legislature amended the state zoning law in furtherance of its stated interest in creating housing opportunities. The first (AB 2292, Dutra) adds Government Code section 65863 and deals with “no-net-loss” of residential densities while the second (AB 1866, Wright) refines the state density bonus law. (Gov. Code § 65915.)

No-Net-Loss

“No-net-loss” is a shorthand description on a new limitation on cities and counties. It is keyed to the protection of residential densities relied upon by the California Department of Housing and Community Development (“HCD”) when it determines that a local government is in compliance with meeting its fair share of regional housing needs.

AB 2292 creates/imposes a duty on cities and counties to ensure that its inventory or program of adequate sites can accommodate its fair share during the relevant planning period. To achieve this objective, the Legislature crafted new rules applicable to land use decisions which reduce those densities.

Special findings are required in circumstances in which the city or county, “by administrative, quasi-judicial, or legislative action” acts to “reduce, require, or permit the reduction of residential density of any parcel to a lower residential density.” These findings apply to parcels relied upon by HCD when determining compliance of a city or county in meeting its fair share housing requirements. Thus, depending on how broadly or narrowly a city or county is in submitting its housing information package to HCD, certain residential parcels may fall outside the scope of this legislation.

A city or county can reduce the density, but to do so it must adopt findings, supported by substantial evidence that the reduction is consistent with the general plan and that remaining sites are available and sufficient to meet community housing needs. If the remaining sites would not be sufficient, then the reduction in density may still take place if the city or county identifies “sufficient additional, adequate, and available sites” such that there is no-net-loss of residential unit capacity.

A housing developer may recover their reasonable attorney’s fees and costs of suit if a court finds that the city or county violated this section.

Section 65863 does not apply to charter cities.

This legislation triggers a number of issues of interpretation, not readily resolved.

Does this legislation apply to actions taken outside the body of zoning law, such as a general plan amendment, which includes a new policy which potentially reduces maximum residential densities which would otherwise occur? Because this legislation was codified in the zoning law, it is debatable whether it is applicable to decisions concerning general plan amendments and the Subdivision Map Act.

This legislation assumes that it is readily determinable which parcels were relied upon by HCD. This may or may not be the case, depending upon the level of detail that the jurisdiction provides in its housing analysis.

The express requirement for substantial evidence and findings does not apply to actions of cities or counties to identify additional sites supporting a determination of no-net-loss. There does not appear any duty to concurrently rezone the property, and no express requirement to finalize the rezoning. In light of the generally stated duty to ensure adequate housing sites during the planning period, a city or county should undertake the necessary rezoning.

If a developer desires to construct at less than maximum density, does this trigger the required findings? If the zoning remains the same but the amount of development is constructed at less than the maximum, then a reasoned argument may be made that this does not violate the statute. Note that this scenario potentially places the city or county between housing advocates pushing for higher density, while the neighbors and developer willing to settle for less.

Density Bonus Amendments

The density bonus law (Gov. Code, § 65915) has been on the books for a number of years, but has never worked terribly well. Under the revised law, administration of density bonuses is to proceed as follows:

First, each city and county, including charter cities, is to adopt an implementing ordinance.

Second, a density bonus and a concession or incentive is available (on incentives of equivalent value) to a developer who agrees to construct residential projects including any of the following features: (a) 20% affordable to lower income households; (b) 10% affordable to very low income households; (c) 50% to qualifying residents (Civ. Code § 51.3 – seniors); or (d) 20% of the units in a condominium project for persons or families of moderate income.

A concession or incentive need not be granted if the agency makes findings, based upon substantial evidence that additional concession or incentive is unnecessary to provide for affordable housing costs. Incentives or concessions can be broadly interpreted, and range from a reduction in development standards, mixed-use zoning or other regulatory adjustment.

Lower income units maybe subject to an enforceable affordability commitment. Moderate income units located in a condominium unit are subject to a 10-year affordability requirement.

The city or county is not required to grant the incentive or concession if there would be a specific adverse impact on public health or safety, or for historic properties on the California Register of Historical Resources. A similar escape provision does not appear for the density bonus. If a court determines that the city or county wrongfully denied an incentive or concession, then the city or county may be obligated to pay reasonable attorney’s fees and costs. Unlike the no-net-loss legislation, this provision is not expressly limited to claims brought by an applicant.

The density bonus is to be calculated based upon the highest allowable density under the zoning and land use element. No general plan amendment or rezoning may be required in order to grant the bonus or the incentive or concession.

Note that an incentive or concession granted to a developer under a density bonus ordinance may trigger the requirement to pay prevailing wages on the entire development including offsite improvements. The California Labor Code, as amended in 2002 by SB 975, expands the application of prevailing wage requirements to projects receiving public funds or subsidy. The definition of public funds or subsidy is broadly defined under this new legislation. Thus, a close examination of all incentives and concessions from a city or county must be conducted to determine the applicability of prevailing wage requirements.

Bill Abbott is a partner and Billy Moore is an associate with Abbott & Kindermann, LLP in Sacramento. For questions relating to this article or any other California land use, environmental and planning issues contact Abbott & Kindermann at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.