Are developer lawsuits about affordable housing?

When the city of Encinitas proposed to update its General Plan in 2008, the Housing Element became contentious because El Camino Real, Encinitas Boulevard and Coast Highway 101 would have been upzoned for three-story and high-density mixed-use buildings. The city justified the upzoning on the grounds that otherwise it would be sued by the state, developers or affordable housing advocates.

In 2010, in support of its claim that lawsuits would come, the city distributed a March 24, 2009 Marin County memo that summarized lawsuits against cities that failed to adopt a Housing Element. The study found that cities that settled lawsuits contributed land and funds to support low income housing, something Encinitas has said it won’t do.

The city continued to use the threat of lawsuits when it supported Measure T.

If voters had approved Measure T, upzoning could have allowed 3,500 new housing units, thus seeming to greatly exceed the Housing and Community Development (HCD) mandate of 1,093 low income units. But in reality, only 10 percent of housing built per Measure T would have been set aside for low income residents.

No lawsuits against the city materialized until the Building Industry Association (BIA), in October 2014, and DCM Properties (David C. Myer), in January 2016, challenged the city’s interpretation of the state Density Bonus Law, not the Housing Element. Application of the Density Bonus Law can increase a project’s number of housing units by 35 percent. The conflict was whether to round fractions up or down when the number of units the zoning allows is calculated.

When DCM amended its complaint four months after filing, it argued that the city did not have the authority to adopt Proposition A (it does), that the Prop A density and height limits made it impossible to comply with HCD low income housing requirements (Prop A has no density restriction) and that Prop A violated the state constitution’s prohibition against cities passing ordinances that conflict with state law (housing, in this case). The claims by DCM contained no supportive argument or case history.

In July 2016, the city settled and paid both plaintiffs’ legal fees — $200,00 to the BIA and $125,000 to DCM. At $400 an hour, that’s 813 hours of legal work. The city promised its best efforts to pass Measure T, but the DCM settlement required that Measure T be passed.

Litigation to nullify Proposition A (a citizen initiative) and to adopt Measure T (a city initiative)  has not been pursued in court. Why? Because many cities and counties have slow growth initiatives, and litigation is more complex, expensive and time consuming than arguing about how to round fractions.

Timeline:

10/10/14 The BIA files lawsuit.

1/25/16 DCM files similar lawsuit.

2/19/16 AB 2501 is introduced, requires density bonus fractions be rounded up.

4/16/16 DCM files amendment, adds claims per Proposition A and Measure T.

7/6/16 The city settles with DCM.

7/22/16 The city settles with the BIA.

8/25/16 AB 2501 is signed into law.

11/7/16 Ballot initiative Measure T fails.

1/10/17 The BIA wants city to adopt a Housing Element.

1/14/17 DCM alleges breach of settlement.

Questions:

1. Why did DCM file suit when the BIA had already sued regarding the Density Bonus Law, and AB 2501 was about to be introduced?

2. Why did DCM add broad complaints about Prop A?

3. Why did the city settle with DCM, requiring adoption of Measure T?

4. Did the city question the BIA and DCM legal bills?

Conclusion:

In Encinitas, only 0.02 percent of residences are considered affordable by HCD standards, whereas in Santa Barbara the figure is 8 percent.

To meet the state mandate for low income housing, Encinitas should follow the example of Santa Barbara, Santa Cruz and Carlsbad.

Those cities partnered with nonprofits to build 100 percent low income rental housing, rather than setting aside only 10 percent of new housing for low income residents.

Brian Burke is an Encinitas resident.

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