HCD enforcement — La Cañada Flintridge — Notice of Violation: HAA / builder's remedy

STATE OF CALIFORNIA - BUSINESS, CONSUMER SERVICES AND HOUSING AGENCY

GAVIN NEWSOM, Governor

2020 W. El Camino Avenue, Suite 500 Sacramento, CA 95833 (916) 263-2911 / FAX (916) 263-7453 www.hcd.ca.gov

==> picture [66 x 67] intentionally omitted <==

June 8, 2023

Mark R. Alexander, City Manager City of La Cañada Flintridge One Civic Center Drive La Cañada Flintridge, CA 91011

Dear Mark R. Alexander:

The California Department of Housing and Community Development (HCD) writes to notify the City of La Cañada Flintridge (City), and its City Council, that it is in violation of State Housing Element Law and the Housing Accountability Act (HAA) (Gov. Code, § 65589.5). This violation occurred when the City, despite technical assistance from HCD, denied an appeal related to the application of the housing project at 600 Foothill Boulevard (Project). The City did so by adopting Resolution 23-14, which purports to uphold the Planning Division’s incompleteness determination for the Project application, issued on March 1, 2023.

The basis for the City’s denial includes, among other findings:

1. that Government Code section 65589.5, subdivision (d)(5), colloquially referred to as the Builder’s Remedy, does not apply and is not available for the Project; and

2. that the Project did not “vest” as a Builder’s Remedy project as alleged in the Project’s preliminary application because the City’s housing element, adopted on October 4, 2022 (October 4, 2022, Adopted Housing Element), was in compliance with State Housing Element Law (Gov. Code, § 65580 et seq.).

Based on HCD’s review of pertinent information in the City’s own staff report, these findings are flawed. The City cannot “backdate” its housing element compliance date to an earlier date so as to avoid approving a Builder’s Remedy application. In short, the October 4, 2022 Adopted Housing Element did not substantially comply with State Housing Element Law, regardless of any declaration by the City. Therefore, the Builder’s Remedy applies, and the City’s denial of the Project application based on inconsistency with zoning and land use designation is a violation of the HAA.

Mark R. Alexander, City Manager Page 2

HCD further reminds the City that, as of the date of this letter, the City remains out of compliance with Housing Element Law unless and until it completes statutorily required rezoning.

The Project is proposed as an 80-unit mixed-use project where 20 percent of the units (16 units) will be affordable to lower-income households. The residential portion equates to approximately 89 percent of the Project; therefore, the Project qualifies as a “housing development project” under the HAA (Gov. Code, § 65589.5, subd. (h)(2)(B)). The base density proposed for this Project is approximately 40.5 units per acre before the application of density bonus under State Density Bonus Law (Gov. Code, §§ 6591565918). HCD understands the timeline for the Project as follows:

• On November 11, 2022, pursuant to Government Code section 65941.1, the Project applicant submitted a preliminary application that was vested on November 14, 2023, after payment of application fees.

• A full application was submitted to the City for the Project on January 13, 2023, and fees were paid on the invoice on January 31, 2023. By submitting this full application within the 180-day period prescribed by Government Code section 65941.1, subdivision (d)(1), the applicant established November 14, 2023 (the date it submitted the preliminary application) as the vesting date of the application.

• On February 10, 2023, the City’s planning division issued the first incompleteness letter on this application, which cited information required for the site plan, floor plan, elevation, landscape plans, grading plans, and the density bonus application, among other things. The letter did not comment on density or development standards relating to the Mixed-Use 2 designation.

• On March 1, 2023, the City’s planning division issued a second incompleteness letter that further found that the Builder’s Remedy would not apply to the Project, that the Project was therefore inconsistent with the Mixed-Use 2 designation, and that the applicant must submit revised plans and materials based on a density of 12-15 units per acre.

• On March 9, 2023, the applicant appealed this incompleteness letter to the City Council.

• On March 22, 2023, HCD provided a Letter of Technical Assistance to the City to help with decision-making related to this appeal.

• On May 1, 2023, the City Council heard and denied the appeal by adopting Resolution 23-14. The Resolution found the following:

  • the Builder’s Remedy under the HAA did not apply and is not available for the Project; and

  • the Project did not “vest” as a Builder’s Remedy project as alleged in the Project’s SB 330 Preliminary Application (submitted November 14, 2022) because the City’s October 4, 2022 Adopted Housing Element was in substantial compliance with State Housing Element Law, regardless of HCD’s finding to the contrary.

Mark R. Alexander, City Manager Page 3

The City’s determination that the October 4, 2022 Adopted Housing Element was in substantial compliance with State Housing Element Law is incorrect and unsupported by law. Pursuant to Government Code section 65585, a local jurisdiction must first submit a draft housing element to HCD and receive HCD’s findings before formally adopting a revised housing element. If HCD finds the draft element is not substantially compliant, the local jurisdiction must revise the draft to address any findings by HCD (Gov. Code, § 65585, subd. (f)(1)) or adopt the housing element without changes and include written findings explaining why the local jurisdiction believes that the draft substantially complies (Gov. Code, § 65585, subd. (f)(2)). Promptly following adoption, the local jurisdiction must submit the adopted housing element to HCD (Gov. Code, § 65585, subd. (g)) and receive findings on the adopted element from HCD (Gov. Code, § 65585, subd. (h)). The following represents the record of housing element submittals to HCD and HCD’s formal responses.

• October 6, 2021 – The City submitted the initial draft housing element to HCD.

• October 15, 2021 – Due date of 6[th] cycle housing element per State Housing Element Law.

• December 3, 2021 – Pursuant to Government Code section 65585, subdivision (b), HCD found the draft housing element required significant revisions to substantially comply with State Housing Element Law.

• October 4, 2022 – The City adopted a housing element that failed to address adequately the findings in HCD’s letter of December 3, 2021. The resolution adopting the housing element made none of the findings required by Government Code section 65585, subdivision (f)(2).

• October 7, 2022 – The City submitted the October 4, 2022 Adopted Housing Element for HCD’s review.

• December 6, 2022 – HCD found the October 4, 2022 Adopted Housing Element required critical revisions to comply with state law, including additional analysis to demonstrate the adequacy of the sites included in its site inventory and policy and programmatic changes pursuant to Government Code section 65585, subdivision (h).

• February 21, 2023 – The City adopted a housing element which addressed adequately the findings in HCD’s December 6, 2022 letter. As part of this adoption, the City further stated that the City’s housing element was in substantial compliance with State Housing Element law as of the October 4, 2022 Adopted Housing Element.

• February 23, 2023 – The City submitted the revised, adopted housing element for HCD’s review.

• April 24, 2023 – HCD found the revised adopted housing element was not in substantial compliance pursuant to Government Code section 65585, subdivision (b). HCD made this finding because the City adopted the element on February 21, 2023, more than one year past the statutory due date of October 15, 2021. As a result, and pursuant to Government Code section

Mark R. Alexander, City Manager Page 4

65588, subdivision (e)(4)(C)(iii), the City must complete required rezones in Program 1 (Adequate Residential Sites to Accommodate the Regional Housing Needs Allocation (RHNA), Program 4 (Downtown Village Specific Plan), Program 5 (Religious Institution Housing Overlay), and Program 6 (By Right Approval for Projects with 20 percent Affordable Units) prior to being found in substantial compliance.

A local jurisdiction has no authority to determine that its adopted element is in substantial compliance with State Housing Element Law.[1] It may, however, provide reasoning why HCD should make a finding of substantial compliance (Gov. Code, § 65585, subd. (f)(2)). As stated in HCD’s letter dated March 22, 2023, a local jurisdiction is “in compliance” as of the date of HCD’s letter finding the adopted element in substantial compliance. A local jurisdiction cannot “backdate” compliance to the date of its adoption of a housing element.[2] Moreover, by revising its October 4, 2022 Adopted Housing Element (in response to HCD’s findings made on December 6, 2022), the City directly contradicted its declaration that that Adopted Housing Element substantially complied with State Housing Element Law. In short, the October 4, 2022 Adopted Housing Element did not substantially comply with State Housing Element Law, regardless of any declaration by the City.

Resolution 23-14 improperly blocks the Project applicant from utilizing protections provided in the HAA. Pursuant to Government Code section 65589.5, subdivision (d), a jurisdiction shall not disapprove a housing development project for very low-, low-, or moderate-income households[3] or condition approval in a manner that renders the housing development project infeasible unless it makes written findings, based upon a preponderance of the evidence in the record, as to one of five findings in subdivision (d).

If HCD does not find a local jurisdiction’s adopted housing element in substantial compliance by the statutory deadline, the jurisdiction cannot use subdivision (d)(5) of Government Code section 65589.5 (inconsistency with zoning and general plan standards) as a basis to deny a qualifying affordable housing project.

1 See “Housing Compliance Memo,” State Department of Housing and Community Development, March 16, 2023. https://www.hcd.ca.gov/sites/default/files/docs/planning-andcommunity/memos/HousingElementComplianceMemo03162023.pdf.

2 Ibid.

3 “Housing for very low-, low-, or moderate-income households” means that either (A) at least 20 percent of the total units shall be sold or rented to lower-income households, as defined in Section 50079.5 of the Health and Safety Code, or (B) 100 percent of the units shall be sold or rented to persons and families of moderate income as defined in Section 50093 of the Health and Safety Code, or persons and families of middle income, as defined in Section 65008 of this code (Gov. Code, § 65589.5, subd. (h)(3)).

Mark R. Alexander, City Manager Page 5

Government Code section 65589.5, subdivision (d)(5), allows a local agency to disapprove an affordable housing project that “is inconsistent with both the jurisdiction’s zoning ordinance and general plan land use designation as specified in any element of the general plan” if “the jurisdiction has adopted a revised housing element … that is in substantial compliance….” Here, because the City does not have a substantially compliant housing element, it may not disapprove an affordable housing project for inconsistency with the zoning and land use designation.

Pursuant to Government Code section 65941.1, subdivision (a), the submittal of a complete preliminary application vests the right to develop a housing development project in accordance with the ordinances, policies, and standards in effect when a preliminary application is submitted (Gov. Code, § 65589.5, subd. (o)(1)). Therefore, if the preliminary application submittal occurs at a time when the jurisdiction does not have a compliant housing element, and the development submittal occurs within the 180-day required period thereafter (Gov. Code, § 65941.1, subd. (d)(1)), the jurisdiction cannot rely upon zoning and land use standards to deny an affordable housing project because the jurisdiction’s noncompliant status was vested, and shall remain, throughout the entitlement process. This rule applies even if the jurisdiction subsequently achieves compliance.

opment submittal occurs within the 180-day required period thereafter (Gov. Code, § 65941.1, subd. (d)(1)), the jurisdiction cannot rely upon zoning and land use standards to deny an affordable housing project because the jurisdiction’s noncompliant status was vested, and shall remain, throughout the entitlement process. This rule applies even if the jurisdiction subsequently achieves compliance.

As the adopted housing element was not in substantial compliance as of November 14, 2022 (the date of preliminary application submittal), the City cannot use Government Code section 65589.5, subdivision (d)(5), to deny the project.

Yet on March 1, 2023, the City issued an incompleteness letter that found that the Builder’s Remedy would not apply to the Project, that the Project was therefore inconsistent with the land use designation, and that as a result, the applicant must submit revised plans.[4] On May 1, 2023, the City Council denied the applicant’s appeal by adopting Resolution 23-14, which found that the Builder’s Remedy did not apply. Although the City Council did not directly vote on or deny a proposed housing development on the site, Resolution 23-14 upheld the planning division’s March 1, 2023 letter, which denied the 80-unit Project as submitted and directed the applicant to submit new site plans and a new project consistent with the Mixed-Use 2 zone density of 12-15 units per acre.

The City’s adoption of Resolution 23-14 therefore effectively denied the Project as proposed in violation of the HAA (Gov. Code, § 65589.5, subds. (d) and (h)(6)(A)).

4 The City’s March 1, 2023, letter appears to incorrectly determine the Project application was incomplete because the Project was inconsistent with zoning standards. Inconsistency with local zoning standards is a reason to deny an application in some circumstances, but it is not a basis for deeming an application incomplete. The City’s finding therefore conflicts with the Permit Streamlining Act (Gov. Code, § 65943, subd. (a)) and the HAA (Gov. Code, § 65941.1, subd. (d)(1)).

Mark R. Alexander, City Manager Page 6

The City violated state law by claiming, without any factual or legal justification, that the Builder’s Remedy did not apply to the Project application (Gov. Code, § 65589.5, subd. (d)(5)). In addition, pursuant to HCD’s housing element findings letter dated April 24, 2023, the City remains out of compliance with State Housing Element Law. Please note HCD’s review of the May 1, 2023, action to deny the appeal of the March 1, 2023 letter was made in furtherance of, and limited to, a determination of the City’s compliance with State Housing Element Law and the HAA. Accordingly, HCD expresses no opinion as to whether the City has complied with, or is excused from, any other provisions of the Government Code governing review and approval of development applications.

Under Government Code section 65585, HCD must review any action or failure to act that it determines to be inconsistent with either an adopted housing element or Government Code section 65583. HCD must then issue written findings to the local government (Gov. Code, § 65585, subd. (i)). Additionally, HCD must notify a local government when that local government takes actions that violate Government Code sections 65589.5 and 65583 and may notify the California Office of the Attorney General (Gov. Code, § 65585, subds. (i)(1) and (j)). By this letter, HCD has done so.

The City has until June 22, 2023, to provide a written response to this Notice. HCD will consider any written response before taking further action authorized by Government Code section 65585, subdivision (j), including, but not limited to, referral to the California Office of the Attorney General. If you have any questions or need additional information, please contact melinda.coy@hcd.ca.gov.

Sincerely,

==> picture [135 x 53] intentionally omitted <==

David Zisser Assistant Deputy Director Local Government Relations and Accountability

==> picture [132 x 61] intentionally omitted <==

Melinda Coy Proactive Housing Accountability Chief

• cc: David Pai, Supervising Deputy Attorney General, California Department of Justice (via email)

Susan Koleda, AICP, Community Development Director (via email)