Is local control of affordable housing development dead? The answer is unclear.

In the early 1980s, the Legislature enacted the Housing Element Law (Gov. Code § 65580 et seq.) and the Housing Accountability Act (“HAA”, Gov. Code § 65589.5), citing the lack of housing as a paramount state concern. Since then, the Legislature has passed multiple laws limiting the discretion of local agencies to disapprove or condition housing projects, most of them declaring that an adequate supply of housing is a matter of statewide concern. Several charter cities have recently challenged these laws, arguing that they invade the authority of charter cities to control local land use. These challenges have met with mixed results in the courts and their ultimate success is still unclear. Given the central importance of the supply of housing to California’s future, the California Supreme Court will likely step in to resolve this power struggle. This article analyzes arguments presented by local governments to preserve their discretion to regulate new housing projects. 

Home Rule Doctrine 

Article XI, Section 5(a) of the California Constitution authorizes a city’s electorate to adopt a charter, effectively the city’s constitution, to govern the city. Charter cities enjoy greater autonomy over municipal affairs, such as regulation of the city police force, the organization of the city government, and the way municipal officers are elected, than do general law cities. The exclusive authority of charter cities over municipal affairs is referred to as the Home Rule Doctrine.

Charter cities, however, are still subject to general state laws in areas that are “of statewide concern.” Whether an issue is a municipal affair or a matter of statewide concern is determined by the courts. Outside of the core municipal functions listed above, courts have held that certain land use and zoning decisions, expenditure of tax revenue, and contracting for goods and services are municipal affairs. The principal rationale for this rule is that these issues vary from city to city, and each city is more likely to be familiar with local problems and solutions than the state government. On the other hand, where a uniform rule for the entire state is most efficient, such as for vehicle registration, government tort claims, and public health, the issue has been found to be of statewide concern.

To determine whether the law of a charter city law is preempted by state law, a court first determines whether the municipal ordinance genuinely conflicts with the state law. If the laws conflict, the court then considers whether the local legislation affects a municipal affair or a matter of statewide concern. A statewide concern requires that the state have a paramount interest in controlling the area of law. If the laws conflict and both regulate a matter of statewide concern, courts will analyze whether the state law is reasonably related to the statewide concern and narrowly tailored to limit incursion into legitimate municipal interests. 

Charter City Challenges to State Housing Laws 

SB 35 is perhaps the most aggressive state law to date to remove discretion from cities to disapprove or condition housing development projects. Under SB 35, a local jurisdiction that has failed to meet its Regional Housing Needs Allocation (RHNA) established by the state for affordable housing may not apply subjective (discretionary) standards to an affordable housing project that meets the jurisdiction’s objective zoning criteria and SB 35’s requirement that the project include a specific amount of affordable housing. In enacting SB 35, the Legislature stated that the statute applies to charter cities.

The City of Huntington Beach, a charter city, recently challenged SB 35 on its face as an impermissible invasion of Home Rule authority. City of Huntington Beach v. The State of California, Case No. 30-2019-01044945. Huntington Beach asked the Court to declare that SB 35 categorically does not apply to charter cities because “[r]egulation of local land use and local zoning are vital and core functions of local government,” qualifying this area of law as a municipal affair. The trial court has yet to rule on the city’s claim. 

Although the Legislature’s declaration in SB 35 that the state’s housing deficit is a matter of statewide concern is not dispositive, it will likely be a factor in the court’s decision. A more important factor may be the alarming gap between demand and supply of affordable housing throughout California. The court could also be influenced by the state’s adoption of multiple laws since 1980 that remove discretion from California local agencies to disapprove or condition affordable housing projects, which for decades have gone unchallenged. 

In San Francisco Bay Area Renters Federation v. City of San Mateo, Case No. 18-CIV-02105 (“SFBARF”), a charter city successfully challenged the HAA under the Home Rule Doctrine. The SFBARF Court assumed, without deciding, that the statute addressed a matter of statewide concern, but nonetheless upheld the city’s discretion to control land use because the HAA is not narrowly tailored “to avoid unnecessary interference in municipal governance.” The court found that the HAA is “not limited to cities and counties that have a history of denying housing developments” and does not apply to “larger projects that may have a significant effect on housing availability.” 

More recently, in Anderson v. City of San Jose (2019) 42 Cal.App.5th 683, the Sixth District Court of Appeal found that the Surplus Lands Act, which requires local government to give priority to affordable housing developers in the sale of surplus property, preempts conflicting charter city policies. The court held that the shortage of sites available for affordable housing development is a matter of statewide concern due to the spillover of the housing deficit from one region to the next. Under Anderson, it is likely that SB 35, the HAA, and similar state laws will be found to address a matter of statewide concern. The ultimate question, then, will be whether these state statutes are sufficiently related to and narrowly tailored to address this statewide concern. 

To Be or Not to Be Narrowly Tailored 

SB 35 only applies to local jurisdictions that have failed to meet their RHNA allocation. A court could find, therefore, that the statute is reasonably related and narrowly tailored to address the lack of affordable housing in California. On the other hand, a city could argue that SB 35 is not narrowly tailored to induce the construction of affordable housing in the city because SB 35 also removes discretion to disapprove office space and other commercial uses ancillary to the housing project, as long as two-thirds of the square footage of the development is designated for residential use. New office space and other commercial space attracts workers who then increase the demand for housing, including affordable housing. 

If it can be demonstrated that an SB 35 project will exacerbate the job-housing imbalance in a community, a court may uphold an as applied challenge filed by a community group to an approved SB 35 project or asserted by a city in defending a lawsuit filed by an unsuccessful applicant for an SB 35 project. Facial challenges by charter cities to SB 35 and its sister legislation under the Home Rule Doctrine, however, will be more difficult because the Anderson Court held that promotion of affordable housing is a matter of statewide concern and these statutes apply only to development projects that meet specific criteria. Thus, a court would likely require a showing that a specific project automatically approved under state law fails to accomplish its purpose of closing the affordable housing gap in the community in question.

Looking Ahead

California has extremely high housing prices and the most acute shortage of affordable housing in the nation. It is therefore difficult to believe that the California Supreme Court will apply the Home Rule Doctrine to invalidate an entire raft of state laws designed to attack a housing problem that local governments have been unable to solve. On the other hand, local governments have traditionally been responsible for land use in their jurisdiction. Stay tuned for the California Supreme Court’s resolution of this issue in the next few years.    

For more information about how the courts are applying state housing laws to charter cities, contact Andrew Schwartz or Benjamin Gonzalez.

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