Key Points

• A recent order from the Santa Clara County Superior Court suggests that California courts intend to uphold and implement SB 35's goals of fast-tracking housing developments that meet established, objective criteria.
• California courts will closely scrutinize the objective planning standards cities and local governments utilize in determining whether a project is compliant with local land use criteria and building codes.
• Developers and housing proponents should be encouraged that SB 35 will be interpreted as written, without excessive loopholes.

In a blow to those that may wish to avoid California Senate Bill 35's streamlined approach to approving new housing development and construction, a recent April 24, 2020 order from the Santa Clara County Superior Court provides encouragement that courts will strictly interpret and apply the statute.

The Court's interpretation of SB 35—one of the first such interpretations since the bill was enacted 2.5 years ago—may have broad impacts across the state. One of the primary elements of SB 35 applies to cities and counties that have not made sufficient progress toward meeting their affordable housing goals for above-moderate and lower-income levels as mandated by the State; for those particular cities and counties, SB 35 requires them to streamline the review and approval of certain qualifying affordable housing projects through a ministerial process.

The underlying lawsuit in Santa Clara County Superior Court involved consolidated petitions for writ of mandate by a developer, 40 Main Street Office, LLC ("Developer"), and a housing non-profit, California Renters Legal Advocacy & Education Fund ("Renters"), against the City of Los Altos (the "City") stemming from Developer's proposed development of a mixed-use building with office space on the ground floor, and 15 residential units on the floors above, in downtown Los Altos. The lawsuit was sparked in December 2018, when the City refused to conduct either an SB 35 streamlined review, or a standard, discretionary review. With respect to its denial for streamlined review, the City claimed that the proposed project: (1) failed to provide the requisite percentage of affordable housing units required by State regulations; and (2) failed to provide the required number of off-street residential and visitor parking spaces and adequate access/egress to the proposed off-street parking (although the City failed to identify what these parking standards were, nor where Developer could find them).

In response to the City's first basis for denial, Developer argued that the City relied on an incorrect affordability threshold metric, and therefore the proposed project qualified for the streamlining process. With respect to the City's second basis for denial—insufficient parking spaces and access to the same—Developer argued that the City failed to identify the objective standards with which the proposed project conflicted, and instead relied on subjective, discretionary standards that cannot be applied in an SB 35 analysis.

In its order granting the petitions and finding that the City failed to comply with SB 35, the Court first noted the applicable legislative history, specifically the Legislature’s goal to create a "streamlined, ministerial approval process for … developments in localities that have failed to meet their regional housing needs assessment [ ] numbers." The Court went on to apply SB 35 to the proposed development, finding that the City's SB 35 denial letter was "neither code-compliant nor supported by substantial evidence," because the City did not adequately identify objective standards, nor provide an explanation of inconsistencies supported by substantial evidence.

Most notably, with respect to the parking and access/egress issues, the Court determined that the City's vague statements that the project lacked "the required number of off-street residential and visitor parking spaces" and "adequate access/egress to the proposed off-street parking" did not lawfully identify the standards or code provisions on which it purported to rely. The Court found that "'adequacy' is not an objective standard that may be applied to streamlined projects," instead noting the definition of objective standards under the statute—standards "that involve no personal or subjective judgment by a public official and are uniformly verifiable by reference to an external and uniform benchmark or criterion available and knowable by both the development applicant or proponent and the public official before submittal.”

The Court’s order bodes well for developers and proponents of affordable housing in California who have called for the strict application of SB 35 in support of the Legislature’s intention to accelerate affordable housing development. The order also suggests that California localities should pay close attention to project applications submitted under SB 35 and to ensure that any denials are based on clearly identified and articulated objective criteria.