Key Points

• California's First District Court of Appeal continued a recent pro-housing trend, reversing a City of San Mateo rejection of a multifamily housing development application. The court determined the denial was based on a subjective design guideline, therefore violating the Housing Accountability Act.
• Ambiguous guidelines may still be utilized in limited circumstances if there is a long-standing and consistent local government interpretation.
• The Housing Accountability Act's recent addition of Section (f)(4) does not violate the California Constitution's home rule, municipal function delegation, or due process protections.

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The Housing Accountability Act's Evolution and Recent Pro-Housing Legal Trends

Since the Housing Accountability Act passed in 1982, the California legislature has repeatedly refined the law to help it achieve its stated purpose of "curbing the capability of local governments to deny, reduce the density for, or render infeasible housing development projects."¹ In recent years, the Housing Accountability Act has been amended to (a) limit local government options to reject housing development applications if the proposal complies with objective general plan, zoning, and design review standards; and (b) establish that a housing application is in compliance if "substantial evidence . . . would allow a reasonable person to conclude" that it does.² So long as a housing project would not have health and safety impacts, local cities and counties have found their discretion to deny or reduce the density of housing projects is limited. The state legislature has also made it difficult to deny qualifying housing projects by requiring public entities to bear the burden of proof that their decision to reject a housing development project conforms to the Housing Accountability Act. Moreover, where legal ambiguities exist, the state legislature put an exclamation on the Housing Accountability Act's intent, stating that "[i]t is the policy of the state that [the Housing Accountability Act] should be interpreted and implemented in a manner to afford the fullest possible weight in the interest of, and the approval and provision of, housing."³

This year, a pro-housing legal trend has emerged in which courts have interpreted recent Housing Accountability Act amendments in a manner favorable to housing interests, providing teeth in the law's substance and enforcement mechanisms that proponents have long sought. Following in the footsteps of the April 2021 decision in Ruegg & Ellsworth v. City of Berkeley,⁴ an appellate court this week published its opinion in California Renters Legal Advocacy and Education Fund v. City of San Mateo, which upended a local government's denial of a ten-unit apartment building application. As detailed below, the 1st District Court of Appeal overturned the trial court decision that initially supported the City's denial, holding that the Housing Accountability Act generally prohibits a local government from rejecting a housing project application based on subjective design guidelines and that the Housing Accountability Act does not violate the California Constitution by impinging on a charter city's "home rule" powers or otherwise violate constitutional strictures.

Objective vs. Subjective Standards in Housing Development Applications

Faced with the common anti-housing argument that new development, particularly multifamily housing, is "out of scale with the houses in the neighborhood," the City's Planning Commission, and later its City Council, rejected the project application, determining that it was not in substantial compliance with the City's design guideline limitations on building scale (the "Guideline"). Specifically, the Guideline states that if there is more than a one-story height variation between adjacent buildings "a transition or step in height is necessary" (emphasis added) and the project should "step back upper floors to ease the transition." According to the Housing Accountability Act, the term "objective" is defined as "involving no personal or subjective judgment by a public official and being 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."⁵ Sharing its view on objectivity versus subjectivity, the court noted that, to be "objective" under the Housing Accountability Act, standards must be applied without subjective judgment or personal interpretation.

With this distinction in mind, the court determined that the Guideline does not meet the "objective" definition as required by the Housing Accountability Act, zeroing in on the Guideline's "transition or step in height" language and providing examples of how a reasonable person might interpret the Guideline differently. For instance, the court held that offering the City decision-makers a choice of how to mitigate a substantial change in height between buildings—i.e., a transition "or" a step—infused the decision-making process with discretion, and furthermore the Guideline did not provide sufficient specificity in how to implement a transition or step. The court also cited the City's evolving interpretation of the Guideline over time as evidence that the Guideline is neither long-standing nor consistently applied. As a result, the Guideline provides an example of a "personal interpretation or subjective judgment that may vary from one situation to the next." Simply put, applying standards such as the Guideline that "are rendered objective only by adding an after-the-fact interpretive gloss" is not permitted under the Housing Accountability Act. Finally, the court determined that deciding whether a law is objective or subjective is a question of law, and not fact, providing the court with more discretion in adjudicating the issue.

The decision emphasized that despite this ruling, the Housing Accountability Act does not bar local agencies from establishing and enforcing design review guidelines that are objective and in place when a project application is deemed complete. Indeed, the court indicated that the City may continue to impose appropriate conditions of approval to mitigate any neighborhood impacts the height differential may cause on the surrounding neighborhood, with the caveat that the conditions cannot require a project to be developed at a lower density unless public health or safety considerations warrant such.

The court also examined the degree of deference a local government should be given when interpreting an ambiguous design guideline. As a general rule, the court indicated that ambiguities may be objectively resolved based on long-standing and consistent local government interpretation. However, noting the Housing Accountability Act limits on local agency power to reject new housing proposals, the court gave a nod to the Ruegg decision and its reasoning regarding objective standards, affirming that the court, for land use decisions under the Housing Accountability Act, must engage in "'more rigorous independent review . . . in order to prevent the City from circumventing what was intended to be a strict limitation on its authority.'"⁶ As a result, subjective guidelines are likely to be disfavored by courts in the housing application context, with deference to local governments only in limited circumstances, such as when an ambiguous definition has been objectively interpreted by a jurisdiction over time.

Housing Accountability Act Constitutionality

The court also evaluated the following constitutional challenges to the HAA:

• Home Rule. Based on a review of a four-part test to determine whether the legislature may exert control over the actions of a charter city despite its right to home rule, the court held that that the Housing Accountability Act does not violate the home rule doctrine. The court found that the Housing Accountability Act's limits on local governments' use of subjective criteria to reject new development pass muster because those limits are reasonably related to the important statewide interest in providing additional housing. Section (f)(4) is intended to require objective standards in local government, namely that a housing development will be deemed to be in compliance if a reasonable person would make such a finding. The court noted that municipalities retain the option to create standards that do not have multiple reasonable interpretations. In short, the court held that the Housing Accountability Act does not remove local government control but rather mandates municipalities to act with clear rules adopted in advance instead of operating through ad hoc housing decisions.
• Prohibition on delegating municipal functions. The court determined that while Housing Accountability Act Section (f)(4), through the substantial evidence standard, makes it easier to show a project is consistent with applicable objective standards, the Act does not delegate municipal authority to any private person. In fact, local governments' broad decision-making authority, subject to judicial review, remains intact, in that they must decide whether or not substantial evidence exists from which a reasonable person could conclude that a project is consistent with objective requirements.
• Due Process. The court also found that the Section (f)(4) substantial evidence standard does not "result in a meaningless, predetermined hearing" that violates due process protections. For instance, Section (f)(4) does not preclude project opponents from making a showing that evidence of compliance fails to meet this standard. Similarly, the Housing Accountability Act does not limit a local government's or a neighbor's ability to present or consider evidence that conditions of approval are necessary to mitigate undesirable impacts on neighbors. The same can be said for attempts to illustrate that a project, if approved at the proposed density, would have an unavoidable "specific, adverse impact upon the public health or safety."⁷ The court left little doubt that project opponents still have a meaningful forum to be heard, even if Section (f)(4) may impact which arguments will be successful.

What Happens Next?

As a result of this decision and the judicial trend toward more strictly enforcing the Housing Accountability Act, local governments will likely seek to avoid basing housing decisions on even arguably subjective standards, particularly if there is no long-standing and consistent interpretation of the same. Over the last few years, local governments around California have already been in the process of reviewing and revising design guidelines to ensure their objectivity. This effort will likely now receive more attention and impact the types of housing decisions planning commissions and city councils are able to make. In addition, municipalities have either recently, or will shortly, review and revise their general plan Housing Elements as the latest Regional Housing Needs Assessment (RHNA) cycle begins, providing another opportunity for local governments to ensure that housing development application standards are objective and defensible.

What is undoubtedly true is that the state's housing crisis is and remains a hot-button political issue. To the extent local governments and housing opponents circumvent efforts to make housing decisions based on objective criteria, state legislators have shown little hesitation to refine the Housing Accountability Act to support its housing creation goals. California courts appear to be in alignment in facilitating housing approvals.

We will continue to monitor housing cases and legislative developments in the coming months. For more information about these changes or any other land use issue you are facing, please contact Alan Linch or the Hanson Bridgett Land Use Group.