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California Can Force Priority for Low-Cost Housing on Public Land

California is allowed to force San Jose and 120 other charter cities to give affordable housing developers the first crack at building on surplus city land, a California appeals court ruled Tuesday.

SAN FRANCISCO (CN) – California can force San Jose and 120 other charter cities to give affordable housing developers the first crack at building on surplus city land, a California appeals court ruled Tuesday.

San Jose had argued the home rule doctrine for charter cities in the California constitution superseded a 2014 state law that makes cities prioritize affordable housing development on surplus public land. Santa Clara County Superior Court Judge Theodore Zayne agreed with the city's position in December 2016 and dismissed the core claims of a lawsuit brought by housing advocates. 

On Tuesday, a three-judge panel from the Sixth District Court of Appeal overruled that decision, finding the "well-documented shortage of sites for low- and moderate-income housing and the regional spillover effects of insufficient housing" justify statewide application of the 2014 law.

The state's Surplus Land Act requires cities, towns and counties looking to unload public land to give affordable housing developers an opportunity to develop the property first before selling it.

San Jose passed a modified version of the law in April 2016, adding two exemptions – one that allows the city to bypass the law if the property is in the downtown corridor and has the potential to accommodate high-rise development and the other for economic development purposes.

"There are certain properties that are more appropriate for economic development," San Jose City Attorney Richard Doyle said. "It's not a one size fits all approach."

Housing advocates also claim San Jose was adjusting formulas in the state law so that affordable housing developers could build properties geared toward those of moderate income or people making as much as $128,000 per year.

The city asked the appeals court to focus on a 2012 Fourth District Court of Appeals ruling, State Building & Construction Trades Council of California v. City of Vista, which held that a charter city need not pay certain contractors the prevailing wage required by state law because wages for laborers building locally funded public works projects are a “municipal affair.”   

Writing for the panel, Justice Eugene Premo found the law at issue in City of Vista was narrower in scope because it specifically addressed wages for contractors working on "the public works projects of public agencies." The panel found the Surplus Lands Act has a broader reach.

"Though its subject addressing the disposal of surplus agency land is particularized, the law’s application is general in that it pertains to all manner of real property owned by local government agencies," Premo wrote.

The justices also found the Surplus Lands Act serves a compelling state interest – increasing the supply of affordable housing and requiring coordination with regional agencies working to combat a severe housing shortage in urban areas of the state.

"We find that the state can require a charter city to prioritize surplus city-owned land for affordable housing development and subject a charter city to restrictions in the manner of disposal of that land, because the shortage of sites available for affordable housing development is a matter of statewide concern," Premo wrote.

Justices Mary Greenwood and Franklin Elia joined Premo on the panel.

Doyle said the city was disappointed with the ruling, adding he thinks the court took the wrong approach when assessing the city's home rule powers under the state constitution.

"This is our property," Doyle said. "Can the state tell us how we are to dispose of our property which is clearly a municipal affair?"

Doyle said he would consult with the San Jose City Council on whether to seek review from the California Supreme Court.

Housing advocates welcomed the decision as a major victory for those hit hardest by the state's affordable housing crisis.

"Our low-income clients celebrate the court's ruling at a moment when displacement and the lack of affordable housing in our state have reached crisis proportions," said Rebekah Evenson, litigation and advocacy director for Bay Area Legal Aid, which represents the plaintiffs.

The plaintiffs included two nonprofit groups, Housing California and Urban Habitat Program, and two individuals, Joana Cruz and Sarah Anderson.

They were represented by Bay Area Legal Aid, Public Advocates, Inc., Public Interest Law Project, and Weil, Gotshal & Manges LLP.

Another attorney for the plaintiffs hailed the decision as a big win for affordable housing.

"The justices recognized that 'public land for public good' isn’t just a slogan, it’s the law of the land in California," said Sam Tepperman-Gelfant, deputy managing attorney at Public Advocates Inc. "Every city can and must prioritize its surplus land for homes affordable to lower-income families."

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Categories / Appeals, Government, Law, Regional

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