Attachment 341
MEMORANDUM
To: Rob Schultz, Town Attorney
From: Sabrina Teller and Jim Moose
Date: August 26, 2016
Re: North 40 Specific Plan Phase I – legal opinion on public comments
regarding State Density Bonus Law application and related issues
This memorandum provides our legal analyses and opinions regarding the merits
of some of the public comments regarding the application of the State Density
Bonus Law and related points relating to the North 40 Specific Plan Phase I
application for a new multi-use development consisting of 320 residential units,
including 49 affordable senior units and approximately 66,800 square feet of
commercial area. In this memo, we address the legal arguments asserted in the
communications from Peter Dominick (July 13, 2016 email to Planning
Commission) and certain comments from Angelia Doerner (August 15, 2016
letter to Town Council), as well as an additional issue you requested that we
consider relating to the definition of “mixed use” development.
I. Summary
We conclude that the fact that the project’s affordable housing is proposed to be
age-restricted does not conflict with the definition of “very low income
households” in the Health and Safety Code and that the project may be entitled to
demand the maximum density bonus of 35 percent because it proposes to reserve
over 11 percent of its residential units to very low income senior residents.
We further conclude that the correct calculation of the base density of the project
site is based on the maximum allowable density of the general plan designation for
the site (270 units), subtracting the existing residential units on the site (asserted
to be between 16 and 19 units), for a base density of at least 251 units. The
applicant proposes its base density as 237 units, which does not exceed the
maximum legal base density.
The fact that the “applicant” for the development project is a partnership of more
than one entity is of no relevance or import for the application of the density
bonus law provisions, because the involvement of more than one entity in one
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proposed enterprise does not impede or conflict with the overall purpose and
intent of the law, which is to facilitate the approval and construction of more
affordable housing.
The record for this project indicates that an application for a project proposing
substantially the same number of units, with a similar percentage of affordable
units and seeking waivers of certain design standards was submitted well before
January 1, 2015, and therefore the density bonus law’s requirements for the
provision of replacement housing on project sites with existing housing are
probably not applicable to this project. In any event, the affordable housing that is
proposed for the site would meet and exceed the number and size of the existing
units, thereby providing adequate replacement units if that requirement does apply
here.
We are unable to confidently determine whether the stand-alone commercial
components of the proposed development require the granting of concessions or
waivers from the Town’s design standards, such as height requirements, because
the definition of “mixed-use” development in the law does not clearly exclude
such commercial development. Based on the focus in the density bonus law
statute on housing developments and the purpose to facilitate more affordable
housing, it seems unlikely, although far from certain, that a court would interpret
the density bonus law to require the Town to grant such a waiver to the non-
residential portion of the project. There may be other reasons for the Town to
consider such concessions or variances, just not necessarily under the mandatory
density bonus law requirements.
II.Dominick Comments
First Bullet Point – Mr. Dominick asserts that the proposed 49 senior housing
units may not qualify as very low income housing for the sake of the 35 percent
density bonus calculation because they will not be provided to all very low income
persons and families (i.e., including non-seniors). Mr. Dominick asserts that the
definition of “very low income households” in the California Health and Safety
Code section 50105 does not encompass age-restrictions.
Response - Health and Safety Code section 50105 defines “very low income
households” as “persons and families whose incomes do not exceed the qualifying
limits for very low income families as established and amended from time to time
pursuant to Section 8 of the United States Housing Act of 1937.” The Health and
Safety Code does not otherwise define “persons and families” except in terms of
income levels. Neither the Health and Safety Code nor the Government Code’s
provisions relating to land use and housing indicate that the term “persons and
families,” as used in this definition, was intended to exclude potential tenants who
are older than a certain age. Notably, section 29.10.020 of the Town Municipal
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Code broadly defines “family” as “one (1) or more persons who comprise a single
household and who live together as a single housekeeping unit.” Individual
seniors are certainly “persons,” and married or related senior couples would seem
to qualify as “families” even if they do not have children living with them.
Indeed, a leading appellate court opinion interpreting the density bonus law
involved a senior affordable housing project, and the court gave no indication that
the age of the tenants was an issue. In Wollmer v. City of Berkeley,1 the court
upheld the respondent city’s application of the law, by which the city had granted
the project proponent a 30 percent unit bonus on the basis of its number of low-
income-affordable units. The ages of the tenants were irrelevant. The density
bonus law specifies that it is the applicant, not the agency, who elects whether to
seek a bonus based on the percentage of affordable housing units proposed or
whether, instead, to seek a bonus based on an age restriction on the tenants
(without consideration of their income). (Gov. Code, § 65915, subd. (b)(2).)
These are two separate categories of housing recognized by statute (a “housing
development for lower income households” versus a “senior citizen housing
development”). Here, the applicant has proposed to reserve more than 11 percent
of its total units to very low income persons who are also seniors; therefore, the
maximum 35 percent density bonus is applicable. (Gov. Code § 65915, subd.
(f)(2).)
If the project applicant were proposing to restrict potential tenants by age without
regard to income, then the project would be a “senior citizen housing
development” under the density bonus law and Civil Code sections 51.3 and
51.12 and would only be entitled to a 20 percent density bonus, as set forth in
Government Code sections 65915, subdivisions (b)(1)(C) and (f)(3). But because
the project will be restricting tenants firstly based on their income and only then to
an older subset of that group, the project applicant may legitimately elect to obtain
the higher density bonus percentage based on number of units reserved for very
low income persons and families.
Second Bullet Point – Mr. Dominick disputes the validity of the base number of
units assumed for the project, calculated by the Town and the applicant as 237.
He believes the basis could not be more than 223, which is the total number of
units proposed (320), subtracting the 97 units that the applicant states would be
infeasible without the requested waiver of building height requirements.
Response - Mr. Dominick appears to misunderstand how the density bonus law
specifies that the base density must be calculated. The law states that the starting
point for determining a density bonus is the “maximum allowable residential
1 (2011) 193 Cal.App.4th 1329.
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density as of the date of the application….” (Gov. Code, § 65915, subd. (f).)
“Maximum allowable residential density” is defined as “the density allowed under
the zoning ordinance and land use element of the general plan, or if a range of
density is permitted, means the maximum allowable density for the specific zoning
range and land use element of the general plan applicable to the project.” (Gov.
Code, § 65915, subd. (o)(2).) In the event of any conflict between the zoning and
the general plan, the general plan’s maximum density prevails.
Here, the Town General Plan states that the maximum capacity of this project site
within the North 40 Specific Plan is 270 units. There are represented to be 16 to
19 existing units on the site, which would be subtracted in calculating how many
additional units could be constructed under the maximum density allowed under
the General Plan. So the applicant could have claimed 251 or 254 units as the
base density, but it proposed a smaller number of units, 237, meaning that it self-
restricted the final number of units it could have proposed with the application of
the maximum 35 percent density bonus to the project.
Third Bullet Point – Mr. Dominick asserts that the density bonus law allows only
a single applicant for a project invoking the law, and that the partnership of
Grosvenor USA Limited and Summerhill Homes for this project’s application
violates the intent of the density bonus law.
Response – While Government Code section 65915 refers to “an applicant,” it
nowhere specifies that an “applicant” may not consist of more than one entity
working in a legal partnership on a particular project. The density bonus law does
not give any indication that the use of the singular term “applicant” was intended
to exclude partnerships; rather, it seems more likely that the term was used
because project applications are typically submitted on behalf of one named entity.
Moreover, an interpretation of the statute that allows such partnerships to reap the
advantages provided in the law seems entirely consistent with the purpose and
intent of the statute, which is to increase the amount of affordable housing in the
State.
The project application proposes the requisite “housing development” to qualify
for a density bonus, in that it proposes more than five residential units on
contiguous sites that are the subject of one development application. (Gov. Code,
§ 65915(i).) The term “applicant” is not defined in the statute, and therefore
there is no legal basis for presuming that the statute excludes partnerships acting
under a single applicant’s identity.
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III. Doerner Comments2
Replacement of Existing Units – Ms. Doerner asserts that, because the applicant
made no request for a density bonus until after June 2015, Government Code
section 65915, subdivision (c)(3), applies and prohibits density bonuses,
incentives, or concessions or for this project, contrary to the representation in the
August 11, 2016 staff report.
Ms. Doerner also contends that because of the age-restriction for the proposed
new units, the replacement units do not meet the spirit and intent of
“replacement” under the density bonus law if families with children or persons
under the age limit who currently reside on the project site are displaced by the
senior housing development.
Response – Government Code section 65915, subdivision (c)(3)(A), disqualifies
an applicant for a density bonus or other incentives or concessions if existing
rental units are present on the project property, or if the dwelling units have been
vacated or demolished in the five-year period preceding the application, or were
subject to rent restrictions or occupied by lower or very low income households,
unless the proposed housing development replaces those units with affordable
units of equivalent size or type, or both. Section 65915, subdivision (c)(3)(C),
provides that subparagraph (A) does not apply to an applicant seeking a density
bonus if the application was “submitted to, or processed by” a city before January
1, 2015.
Counsel for the applicant asserts that the application for the project was submitted
on November 14, 2013. The applicant further asserts that the original version of
the project described in its initial application materials is substantially similar to
that version that was eventually deemed complete in spring 2016, in that (i) the
total number of units was similar, (ii) a similar portion of those units would be
reserved for low-income seniors, and (iii) prior to 2015, requests for height
exceptions similar to the current waiver requests were made.
Assuming the Town’s files support those representations, we conclude that the
replacement housing requirement in section 65915, subdivision (c)(3)(A), may
not apply. We reach this conclusion because, as early as 2013, an application was
made that: requested more units than the maximum allowable density under the
General Plan; included affordable housing components; and requested exceptions
to fixed standards such as height requirements. Even if the applicant did not
2 In this memo, we address only Ms. Doerner’s comments relating to the
replacement unit requirement for project applications submitted after January 1,
2015.
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formally or expressly invoke the “density bonus law” in its communications with
the Town until 2015, there was an application filed before 2015 for a housing
development on the proposed site that could not be approved without a density
bonus and waiver of certain otherwise applicable development standards. Such an
application impliedly invoked the density bonus law because the proposed project
could not have been approved without the application of that law.
Section 65915, subdivision (c)(3)(C), provides that the replacement housing
requirement “does not apply to an applicant seeking a density bonus for a
proposed housing development if his or her application was submitted to, or
processed by, a city, county, or city and county before January 1, 2015.” (Italics
added.) This provision does not say that the “application” must have been
expressly for the bonus, rather than for the housing development as a whole. As
development applications routinely do evolve over time, often over months or
years, before being finally approved, it is reasonable to interpret this provision as
referring to the submittal or processing of the housing development application.
In fact, an important earlier provision describing the basic mechanism of the
density bonus process supports this broader view. Section 65915, subdivision
(b)(1), provides that a city shall grant one density bonus, incentives or concessions
“when an applicant for a housing development seeks and agrees to construct a
housing development” that will contain some percentages of units for lower or
very low income persons or families or senior housing. From this early context in
the statute, it is reasonable to interpret subdivision (c)(3)(C) as referring to the
original application for a housing development, and not to a separate, express, or
later application for a density bonus.
Regarding Ms. Doerner’s assertion that the units to be constructed in the
proposed housing development do not satisfy the statute’s requirement for
replacement units of “equivalent size or type, or both,” the statute itself does not
define “equivalent size or type.” Size suggests an objective calculation based on
either square footage of dwellings or bedroom units. The concept of “type” is
open to a variety of interpretations, including building type (apartment, duplex,
detached single-family house, townhouse), affordability to income levels, age of
residents, or architecture. We reviewed the legislative history for AB 2222 (West),
which shows that the Legislature added the requirement for replacement housing
in 2014. The bill analyses and committee reports also do not define “equivalent
size and type,” but they do suggest that the primary focus of the requirement was
on maintaining affordability levels.
The applicant’s counsel’s letter dated August 22, 2016 notes that there is a bill
(AB 2556) currently pending in the State Senate for a third reading to clarify the
replacement housing provisions. The bill provides that equivalent size means the
same total number of bedrooms in the replacement units. The bill would also
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delete the references to “type,” so that ambiguity may go away, at least. If that bill
passes and is signed, then according to the applicant’s counsel, the proposed
project would meet and exceed that requirement for bedrooms as well as square
footage of the units, potentially accommodating a greater number of residents than
the existing units. 3
IV. Mixed-Use Development
You asked for analysis regarding the definition of “mixed-use development” and
whether the requested waiver of height requirements under the density bonus law
should apply to the entire development proposal, including the three stand-alone
commercial buildings, or whether those must be excluded because they may not
be considered mixed-use.
Under the portion of the Government Code that concerns housing elements,
section 65589.5 explains that a local agency is prohibited from denying or
restricting a “housing development project” for low-income residents by imposing
design review standards unless the agency makes certain findings spelled out in the
statute. (Gov. Code, § 65589.5, subd. (d).) Subdivision (h)(2) defines “housing
development project” as “a use consisting of any of the following:
(A) Residential units only.
(B) Mixed-use developments consisting of residential and nonresidential
uses in which nonresidential uses are limited to neighborhood commercial
uses and to the first floor of buildings that are two or more stories. As used
in this paragraph, “neighborhood commercial” means small-scale general or
specialty stores that furnish goods and services primarily to residents of the
neighborhood.
(B) Transitional housing or supportive housing.” (Italics added.)
Section 65589.5’s definition of “housing development project” could be
interpreted a couple of different ways with respect to the type of commercial uses
that can be considered part of the project. It could be read to require that
“nonresidential uses” must be both neighborhood commercial and be found on
the first floor of buildings. Or it could be interpreted to treat these two items as
separate categories, i.e., that “neighborhood commercial” is one allowed category
of nonresidential uses and “first floor [nonresidential] uses” is another. If the
3 For this specific question, we have relied on the applicant’s counsel’s
representation of the number of bedrooms in the existing units and their square
footage, but we have not independently verified that assertion.
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second interpretation is correct, however, the stand-alone commercial buildings
with no residential units that are proposed within the North 40 project would have
to meet the definition above for “neighborhood commercial.” We did not find any
case law interpreting this section and the meaning of “mixed-use development.”
The density bonus law has a somewhat different definition of “housing
development.” Government Code section 65915, subdivision (i) provides that:
“Housing development,” as used in this section, means a development
project for five or more residential units. For the purposes of this section,
“housing development” also includes a subdivision or common interest
development, as defined in Section 4100 of the Civil Code, approved by a
city, county, or city and county and consists of residential units or
unimproved residential lots and either a project to substantially rehabilitate
and convert an existing commercial building to residential use or the
substantial rehabilitation of an existing multifamily dwelling, as defined in
subdivision (d) of Section 65863.4, where the result of the rehabilitation
would be a net increase in available residential units. For the purpose of
calculating a density bonus, the residential units shall be on contiguous sites
that are the subject of one development application, but do not have to be
based upon individual subdivision maps or parcels. The density bonus shall
be permitted in geographic areas of the housing development other than the
areas where the units for the lower income households are located.
Section 65915, subdivision (k) goes on to define “concession or incentive”:
k) For the purposes of this chapter, concession or incentive means any of
the following:
(1) A reduction in site development standards or a modification of zoning
code requirements or architectural design requirements that exceed the
minimum building standards approved by the California Building Standards
Commission as provided in Part 2.5 (commencing with Section 18901) of
Division 13 of the Health and Safety Code, including, but not limited to, a
reduction in setback and square footage requirements and in the ratio of
vehicular parking spaces that would otherwise be required that results in
identifiable, financially sufficient, and actual cost reductions.
(2) Approval of mixed-use zoning in conjunction with the housing project if
commercial, office, industrial, or other land uses will reduce the cost of the
housing development and if the commercial, office, industrial, or other land
uses are compatible with the housing project and the existing or planned
development in the area where the proposed housing project will be located.
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(3) Other regulatory incentives or concessions proposed by the developer or
the city, county, or city and county that result in identifiable, financially
sufficient, and actual cost reductions.
While the density bonus law’s definition of “housing development” includes a
reference to “one development application,” which could include proposed
developments of varying land-use types on contiguous sites, the concession and
incentive definitions only refer to commercial uses in the context of approving
mixed use zoning to support the overall cost of the housing development. Given
that the housing element law defines mixed-use in such a way that may not apply
to stand-alone commercial developments, our conclusion is that the Town may
not be under any obligation to extend the height waiver request to the stand-alone
commercial buildings proposed within the project site because they do not include
any residential component. This statute, however, is far from clear, and as far as
we could determine, this issue of whether purely commercial buildings (even for
“neighborhood commercial” uses) can be granted waivers from development
standards simply because they are included in a development application which
also includes housing to which the density bonus law applies has not been decided
by any court yet. Therefore, we cannot confidently predict how a court might
interpret these provisions as applied to this project.