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Item 6 Staff Report Authorize Participation in Amicus Curiae Brief in Associated Home Builders of Northern California v. City of Napa, California Court of Appeal Case No. A090437, at no Cost to TownDATE: TO: FROM: SUBJECT: MEETING DATE: 5/22/00 ITEM NO. COUNCIL AGENDA REPORT May 2, 2000 MAYOR AND TOWN COUNCIL ORRY P. KORB, TOWN ATTORNEO AUTHORIZE PARTICIPATION 1N AMICUS CURIAE BRIEF IN ASSOCIATED HOME BUILDERS OF NORTHERN CALIFORNIA V. CITY OF NAPA, CALIFORNIA COURT OF APPEAL CASE NO. A090437, AT NO COST TO TOWN RECOMMENDATION: Authorize the Town Attorney to join the Town of Los Gatos in the amicus curiae brief in the case ofAssociated Home Builders of Northern California v. City of Napa, California Court of Appeal Case No. A090437, at no cost to Town. DISCUSSION: The City ofNapa adopted an inclusionary ordinance requiring that developers ofresidential property provide affordable housing units and/or in -lieu payments. Shortly after the ordinance became effective, plaintiffs filed this lawsuit challenging the validity of the ordinance on its face under various theories of law. The Superior Court granted the City's demurrer to the lawsuit, and the matter is now being appealed by the plaintiffs. This is an important case in California as the issue of providing affordable housing continues to grow. Many California municipalities have adopted inclusionary ordinances similar to Napa's, including Los Gatos with its Below Market Price program, and the outcome of this case will directly impact the validity of such ordinances. Attachments: Distribution: Letter dated April 18, 2000 from Napa City Attorney Thomas B. Brown, City Attorney, City of Napa, P.O. Box 660, Napa, CA 94559-0660 PREPARED BY: ORRY P. KORB, TOWN ATTORNEY OPK/ct [N:IATYWAPA.AMI] Reviewed by: Manager Revised: 5/2/00 1:58 pm Reformatted: 10/23/95 File# 301-05 *T41 CITY of NAPA April 18, 2000 TO: California City Attorneys r.7110EIVED APR 2 2d0 TOWN ATTNY CITY ATTORNEY 955 School Street PO Box 660 Napa, California 94559-0660 (707) 257-9516 (707) 257-9274 (Facsimile) RE: REQUEST FOR AMICUS CURIAE SUPPORT IN ASSOCIATED HOME BUILDERS OF NORTHERN CALIFORNIA V. CITY OF NAPA; CALIFORNIA COURT OF APPEAL NO. A090437; APPEAL FROM SUPERIOR COURT JUDGMENT REJECTING CHALLENGES TO RESIDENTIAL INCLUSIONARY ORDINANCE Dear City Attorneys: The City of Napa requests your cities' amicus curiae support in the above -referenced case involving a challenge brought by the Associated Homes Builders of Northern California, represented by the Pacific Legal Foundation, against the City's residential inclusionary zoning requirement. The Legal Advocacy Committee of the League of California Cities also urges cities to join in this effort. BRIEF DESCRIPTION OF CASE The City of Napa adopted its inclusionary ordinance, similar in substance to ordinances adopted by some 75 cities and counties statewide, to address impacts on affordable housing created by the development of market rate residential projects by requiring generally that 10% of all new residential dwelling units be affordable, and by imposing rent and resale requirements to ensure the . continued affordability of the units constructed. The ordinance permits a residential developer to satisfy the requirement either by an "alternative equivalent proposal," including a dedication of land or the construction of affordable units on another site, or, again at the developer's option, by payment of an in -lieu fee to be used only to increase and improve the supply of affordable housing in the City. The ordinance also allows developers various affordable housing concessions and incentives, and permits developers to appeal to the City Council for a reduction, adjustment or complete waiver of the inclusionary/in-lieu fee requirements based upon a demonstrated absence of a reasonable relationship or nexus between the requirements and the impact of the development. California City Attorney Page 2 April 18, 2000 The history of the adoption of the ordinance is notable in reflecting that Napa did not "force" the ordinance on the development community, but rather created a truly local, consensus solution unanimously supported by au local stakeholders, including developers and builders. When the first version of the ordinance was presented to the City Council at a public hearing in early 1999, extensive public comment from the building, development and realtor communities concerning perceived burdens and problems with the draft ordinance's initial requirements prompted the Council to direct staff to undertake additional consensus building, and to make substantial revisions to the draft ordinance, in order to address the concerns of, and compromise with, all stakeholders, including the Chamber of Commerce, affordable housing advocates, non- profits, the Napa-Solano Builders Exchange, the Napa Construction Coalition, the Napa Valley Economic Development Corporation, the North Bay Association of Realtors and the Napa Chapter of the Association of Realtors. These revisions subsequently were approved by the City Council, and the ordinance, which was supported by findings articulating the relationship between the development of market rate housing and the aggravation of the affordable housing crises, was adopted in July, 1999. Shortly after the ordinance became effective, the Associated Home Builders, represented by the Pacific Legal Foundation (PLF), filed a lawsuit challenging the ordinance on its face. The lawsuit contained six causes of action claiming as follows: (1) the ordinance was not premised on an ordinance -specific study showing a nexus between the development of market rate housing and the need for affordable housing, and thus on its face constituted a taking under a "heightened scrutiny" analysis assertedly imposed under the Tlollan/Dolan line of cases, and under that part of the California Supreme Court's Ehrlich decision concerning the ad hac recreational fee imposed there; (2) the ordinance violated due process by lacking any demonstrated nexus between the development of market rate housing and the creation of affordable housing needs, and by denying developers of market rate housing a "fair return"; (3) the ordinance constituted a development fee adopted in violation of the Mitigation Fee Act, Government Code Section 66000, et seq.; (4) the ordinance imposed a tax in violation of Proposition 13; (5) the ordinance imposed a tax in violation of Proposition 62; and (6) the ordinance imposed a tax in violation of Proposition 218. The City demurred, arguing that these arguments were either at odds with settled law, premature, or both. The Superior Court agreed with the City's arguments, and thus sustained its the City's demurrer as to all causes of action without leave to amend. The Home Builders then appealed the case to the First District Court of Appeal. WHY THIS CASE MERITS CITIES' ATTENTION This case obviously involves several issues of critical importance to cities statewide. First, although there are published decisions validating affordable housing fees on commercial development, this is the first challenge of which Napa is aware to any residential inclusionary ordinance requiring developers of residential, market rate housing to provide inclusionary units or in -lieu payments. Insofar as some 75 cities and counties statewide have similar inclusionary requirements, the outcome of this case will directly impact the validity of such ordinances. California City Attorney; Page 3 April 18, 2000 Moreover, even those cities without inclusionary ordinances will be affected by the outcome of this case. The Home Builders' and PLF's argument concerning the applicability of heightened scrutiny under NollaniDolan to this police power zoning ordinance requirement imperils not only inclusionary ordinances, but land use and other police power ordinances as well. If the plaintiff is successful in persuading a court to accept heightened scrutiny as the applicable standard, cities' ability to exercise basic police power regulatory authority will be severely diminished. Plaintiff's other theories are of similar concern to cities. For example, the assertion that the inclusionary in -lieu fee, which under virtually all inclusionary ordinances is not mandatory at all, but rather one of many development options, may be challenged as a tax under Propositions 13, 62 and 218, threatens to undermine cities' ability to impose mitigation fees to defray impacts created by new development. So too does the assertion that such ordinances are subject to a "staturory heightened scrutiny" under the Mitigation Fee Act. ISSUES ON WHICH AMICUS ASSISTANCE WOULD BE HELPFUL I have discussed this matter with the proposed amicus brief writer, Rick Judd of Goldfarb & Lipman, and Andrew Schwartz, the San Francisco Deputy City Attorney (and takings expert) assigned by the Legal Advocacy Committee to supervise the amicus effort. We propose the following issues would benefit from analysis in an amicus brief: 1. The history of the affordable housing crisis in California, the pressure exerted by State law on cities and counties to address this crisis; the use of inclusionary ordinances statewide to address such problems; and the benefits and successes of such programs; 2. How the Home Builders/PLF takings and due process theories threaten basic principles of separation of powers by improperly inviting courts to second guess the wisdom of basic legislative determinations on land use issues reserved to local legislative bodies; 3. Why plaintiffs' heightened scrutiny theory fails, and why the ordinance withstands the scrutiny instead under deferential rational basis standards, pursuant to Ehrlich and Santa Monica Beach; and 4. That in fact the Court should take this opportunity to clarify that the decisions in Ehrlich and Santa Monica Beach do not authorize courts to use taking analysis to test how well government's chosen means serve its ends, and that passing references in those cases which may imply differently should not be relied on. California City Attorney Page 4 April 18, 2000 ANTICIPATED BRIEFING SCHEDULE The appellants' opening brief likely will be filed within 30 to 60 days, or by mid -May to mid -June, 2000. The City's brief, and that of amid, thus would be due by mid -June to mid -July, 2000. Cities wishing to join in this amicus effort are encouraged to notify the brief writer, Rick Judd of Goldfarb & Lipman by May 31, 2000. CONCLUSION This case plainly is a matter of widespread interest to all California cities, and the attorneys from the PLF have made clear their intention to take this case as far as possible. The City of Napa and the Legal Advocacy Committee urge cities to lend their support to turn away these efforts to undermine basic and well -accepted police power responses to the difficult affordable housing crisis which confronts all California cities, and for which the State of California has imposed increasingly difficult compliance requirements. Please return the enclosed form to Rick Judd by May 31, 2000. ruly yours, TH City Attorney TB:st cc. Rick Judd, Esq. Andrew Schwartz, Esq. Kirk Trost, Esq. Richard Marcantonio, Esq. Michael Rawson, Esq. Dara L. Schur, Esq. Richard Rothschild, Esq. Mayor and Council Pat Thompson Peter Dreier John Yost Town Council Minutes Redevelopment Agency COUNTY REFERRALS (02.47) Motion by Mr. Hutchins, seconded by Mr. County Referrals: NUMBER LOCATION 7741 16209 Maya Way Carried unanimously. APPLICATIO Restifo May 22, 2000 Los Gatos, California Pirzynski, that Council accept the report concerning N REQUEST Variance RECOMMENDATION Approval if no garage currently exists/One Condition PLANNING COMMISSION & DEPARTMENT MONTHLY STATUS REPORT (03.47) Motion by Mr. Hutchins, seconded by Mr. Pirzynski, that Council accept and file informational monthly status report regarding Planning Department. Carried unanimously. RATIFICATION OF PAYROLL/APRIL 2000 (04.V) Motion by Mr. Hutchins, seconded by Mr. Pirzynski, that Council ratify the check registers for the payrolls of April 16, 2000 through April 29, 2000, paid on May 5, 2000, in the amount of $400,010.59. Carried unanimously. ACCOUNTS PAYABLE/RATIFICATION/APRIL 2000 (05.V) Motion by Mr. Hutchins, seconded by Mr. Pirzynski, that Council ratify the accompanying check registers for accounts payable invoices paid on April 28, 2000, and May 5, 2000 in the amount of $649,634.73. Carried unanimously. AMICUS BRIEF/HOME BUILDERS NORTHERN CALIF/VS/CITY OF NAPA (06.01) Motion by Mr. Hutchins, seconded by Mr. Pirzynski, that Council authorize the Town Attorney to join the Town Attorney to join the Town of Los Gatos in the amicus curiae brief in the case of Associated Home Builders of Northern Californiz vs. City of Napa, California Court of appeal Case #A090437, at no cost to Town. Carried unanimously. PLANNING COMMISSION/COMMENDATION/SANDY DECKER/RESOLUTION 2000-47 (07.20) Motion by Mr. Hutchins, seconded by Mr. Pirzynski, that Council adopt Resolution 2000-47 entitled, RESOLUTION OF THE TOWN OF LOS GATOS COMMENDING SANDY DECKER FOR HER SERVICE TO THE TOWN AS A MEMBER ON THE PLANNING COMMISSION. Carried unanimously, BRIDGE STRUCTURES/PROJECT 9935/SEISMIC RETROFIT/RESOLUTION 2000-48 (08.35) Motion by Mr. Hutchins, seconded by Mr. Pirzynski, that Council adopt Resolution 2000-48 entitled, RESOLUTION OF THE TOWN OF LOS GATOS APPROVING PLANS AND SPECIFICATIONS FOR PROJECT 9935 - SEISMIC RETROFIT - TWO BRIDGE STRUCTURES AND AUTHORIZE THE CLERK TO ADVERTISE FOR BIDS. This motion includes the information received in this evening's desk item. Carried unanimously. TC: D11: MM052200 2