In Bankers Hill 150 v. City of San Diego (2022) 74 Cal.App.5th 755, the Fourth District Court of Appeal considered arguments that a residential development including affordable housing in San Diego (City) was inconsistent with a number of land use plan policies. The Court held that the Density Bonus Law (Gov. Code, § 65915 et seq.) prevented disapproval of the project due to inconsistencies arising out of the allowed density or concessions granted, questioned whether the City could have denied the development due to any of the alleged inconsistencies under the Housing Accountability Act (HAA) (Gov. Code, § 65589.5), and upheld the City’s findings of consistency with the relevant standards nonetheless.

The case involved approval of a 20-story mixed-use building with 204 residential units adjacent to Balboa Park (Project). Eighteen of the units were proposed to be deed restricted to make them affordable to very low-income households. Following the City’s approval, Bankers Hill 150 and Bankers Hill/Park West Community Association (Petitioners) filed a lawsuit challenging the Project and its approval. The trial court denied the petition and Petitioners appealed.

Density Bonus Law

As the Court of Appeal explained, the Density Bonus Law incentivizes developers to include affordable units, primarily by allowing qualifying projects to exceed otherwise applicable density limits. It also grants the developer a set number of concessions, allowing other standards to be rendered inapplicable at the developer’s election, and unlimited waivers of any standards that would prevent development at the proposed density. The law is implemented through municipal code provisions governing its application in a jurisdiction. Its benefits must be granted to a qualifying development unless the local government makes a finding that a requested concession will not result in actual cost reductions, or that any of the benefits would be contrary to federal or state law or would result in a specific adverse impact to public health and safety or historic resources.

Here, the City calculated that the Project’s 18 affordable units entitled it to a 38.75% density bonus, allowing for 57 units in excess of the site’s density limitation, as well as 3 concessions. The developer requested one of its concessions be used to avoid a setback from an adjacent street, which would have required the building to be unduly narrow and compelled a single loaded corridor. They also requested two additional incentives not relevant to the appeal.

Petitioners argued that the setback deviation rendered the Project inconsistent with standards established under the City’s land use plans related to views, transitions, and architectural design standards. Given these inconsistencies, Petitioners argued that the City was precluded from permitting the development at the proposed 20-story height. Implicitly, they argued that, despite the Project being entitled to the reduced setback under the Density Bonus Law, the City could and should have denied it. The Court rejected the argument, observing that allowing an agency to deny a project on this basis would defeat the Density Bonus Law’s purpose of increasing affordable housing.

Petitioners also contended that elimination of a proposed interior courtyard could have allowed the project to be built more horizontally and thereby comply with some, if not all, of the waived design standards. Yet that precise argument had been raised and rejected in Wollmer v. City of Berkeley (2011) 193 Cal.App.4th 1329, which held that the Density Bonus Law does not require stripping project amenities such as courtyards to avoid using density bonus concessions. As such, the Project was not required to remove the courtyard to comply with the waived standards.

Housing Accountability Act

Petitioners argued that the Project was inconsistent with a number of, mostly aesthetic, development standards. While the Court expressed skepticism that the Project could have been denied for any alleged inconsistencies arising from the conceded setback deviation, it nonetheless considered the merits of the alleged inconsistencies. The City cited case law supporting that it was entitled to “significant deference” in its findings that the Project was consistent with its land use plans. However, the Court requested supplemental briefing on this issue in light of the HAA and a recent case interpreting the statute, California Renters Legal Advocacy and Education Fund v. City of San Mateo (2021) 68 Cal.App.5th 820 (CRLA) (See TLG’s coverage of CRLA here). In CRLA, the First District recognized that, under the HAA, an agency may deny a project on the basis that it is inconsistent with development standards only if those standards are “objective.” Further, the CRLA court held that it would be inappropriate under the HAA to defer to a city’s interpretation of its own development standards when reviewing such a denial.

Here, the Court considered whether the City was still owed deference in its interpretation of its land use plans in light of the HAA and the holding of CRLA. It concluded, however, that there was not the same need for the “more rigorous independent review” utilized in CRLA where, as here, the agency approved the Project. The Court further observed that many of the standards raised by Petitioners appeared to be entirely subjective, and therefore could not be a basis for denying the Project under the HAA. Nonetheless, it declined to rule on these grounds, as the City’s findings that the Project was consistent with the standards were adequately supported regardless of the deference owed.

Consistency with Land Use Plans

The Court considered and rejected each alleged inconsistency raised by Petitioners. It upheld the City’s finding that the Project did not impact view corridors because the adjacent rights of way were not classified as such. Additionally, Petitioners’ argument that the Uptown Community Plan required adequate transitioning to adjacent lower height buildings in “residential neighborhoods” was unavailing because the Project was not in a “residential neighborhood.” Similarly, while the Community Plan required transitions for large buildings constructed next to existing, smaller buildings along the borders of areas with different zoning, the Court found that Petitioners’ interpretation that these policies also applied to parcels sharing the same zoning was contradicted by the plain language and the City’s established interpretation.

Petitioners also argued that the Project did not comply with the General Plan policy to design development adjacent to natural features, here allegedly Balboa Park, in a manner complementary to the natural environment. While the Court acknowledged that some parks contained “natural features,” Balboa Park, in particular, was characterized as “modifying” the natural environment in the General Plan. Further, even if the policy was applicable, the Court noted that the record adequately supported that the Project would complement the park, exceeding design requirements specifically meant to enhance the areas bordering it. Petitioners also alleged that the Project did not satisfy policies to minimize view obstructions through the use of features such as balconies and terraces, though the Project contained features satisfying these requirements. Further, Petitioners’ focus on private views of the park was misplaced given the policies’ concern with public views.

Lastly, Petitioners alleged that the City could not approve the Project because the applicable Community Plan Overlay Zone only permitted buildings over 65 feet in height if they were also in compliance with all other applicable land use plans, which Petitioners alleged the Project was not. For the aforementioned reasons, the Court rejected most of the alleged inconsistencies. The Court noted that, at most, the Project could be considered inconsistent with the specific setback requirement rendered inapplicable by the Density Bonus Law concession. But the Court concluded that the Project’s height was a result of the density bonus, and therefore that the Density Bonus Law required waiving the height limit in order for the Project to be constructed at the allowed density. As such, Petitioners failed to establish any abuse of discretion and the judgment was affirmed.

Key Points:

• The Density Bonus Law allows a project with affordable housing to exceed density limits and render other standards inapplicable where such a concession would result in cost reductions or where necessary to build at the proposed density.
• The HAA renders subjective development standards inapplicable to housing development projects.
• Confluence of the two laws can significantly limit the scope of development standards applicable to a housing development with an affordable component.