Filed 6/15/20 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION THREE

AIDS HEALTHCARE FOUNDATION

,

Plaintiff and Appellant

,

v.

CITY OF LOS ANGELES et al.

,

Defendant s and Respondents ;

CH PALLADIUM

, LLC et al.,

Real Parties in Interest and Respondents. B 303308

Los Angeles County Super. Ct. No. 19STCP03387

APPEAL from a judgment of dismissal of the Superior Court of Los Angeles County, Robert S. Draper , Judge

. Affirmed

. A IDS Healthcare Foundation, Thomas A. Myers, Arti L.
Bh i mani, Liza M. Brereton; Strumwasser & Wooche r and Beverly Grossman Palmer for Plaintiff and Appellant.
Office of the Los Angeles City Attorney, Michael N. Feuer, Terry Kaufmann

- Macias, John W. Fox, Jennifer Tobkin, Kathryn Phelan

, Kabir Chopra, Craig Takenaka, Mei

- Mei Cheng, Elaine Zhong; Burke, Williams & Sorensen, Charles E. Slyngstad, Nicholas J. Muscolino; Best, Best & Krieger and2

Christi Hogin for Defendants and Respondent s City of
Los Angeles and the Los Angeles City Council

. Latham & Watkins, James L. Arnone and Benjamin
J. Hanelin for Real Parties in Interest and Respondents
CH Palladium, LLC, CH Palladium Holdings, LLC and
5929 Sunset (Hollywood), LLC. DLA Piper, A. Catherine Norian, Kyndra Joy Casper, Andrew Brady and Karen L. Hallock for Real Party in Interest and Respondent CRE

- HAR Crossroads SPV, LLC. Glaser Weil Fink Howard Avchen & Shapiro, Patricia L. Glaser, Joel Klevens and Alexander J. Suarez for Real Party
in Interest and Respondent 6400 Sunset , LLC.

_______ __________________
INTRODUCTION
This a ppeal concerns four separate multi

- use development projects within a one

- mile radius along Sunset Boulevard in Hollywood. After filing unsuccessful petitions for writ of mandate challenging the approval of two of the projects under
various land use laws

, 1 a ppellant A IDS Healthcare Fou ndation (AHF) sued the City of Los Angeles and the Los Angeles City Council (collectively , City) for violating the federal Fair Housing
Act (the FHA) and the state Fair Emp loyment and Housing Act (FEHA) based on a disparate

- impact theory of liability

. AHF now alleges the City’s approval of the four “upscale ” developments will cause housing prices in the area to rise and disproportionately

1 AHF filed separate petitions for writ of mandate to challenge the projects under CEQA, the Los Angeles City Charter and Municipal Code, and other zoning and land use laws

. Final judgments have been entered against AHF on two of its challenges and its other two petitions await trial.3

displace Black and Latino residents who no longer will be able to
afford to live there

. The City and R eal P arties in I nterest

— the projects ’ owners
and developers

— separately demurred to AHF’s complaint. The
trial court sustained the demurrers without leave to amen d after finding AHF failed to state a c ause of action for violation of the
FHA or FEHA

, the statute of limitations barred the complaint

as to three of the projects

, and the doctrine of res judicata and prohibition against basing two lawsuits on a single cause of
action precluded the action

. We conclude the trial court correctly found AHF cannot assert a cause of action under the FHA and FEHA based on
its alleged disparate

- impact theory of liability and affirm the judgment on that basis alone

. FACTS AND PROCEDUR AL BACKGROUND Consistent with the applicable standard of review, we draw our statement of facts from the allegations in the complaint and matters properly subject to judicial notice. 2 ( Blank v. Kirwan

2 The trial court properly took judicial notice of several court documents and City records

. Our summary includes facts stated in those documents. On appeal, Real Parties in Interest 5929 Sunset (Hollywood), LLC and CRE

- HAR C rossroads SPV, LLC filed a joint motion requesting we take judicial notice of court records from the re lated petitions for writ of mandate AHF and others filed against them

. AHF did not oppose the motion. We now grant the joint motion and take judicial notice of the identified documents. (Se e Evid. Code, § 452, subd. (d) [ “Judicial notice may be taken of . . . [r] ecords of [ ] any court of this state

. ”] ; § 453 [ court “shall” take judicial notice of a matter specified in Evid ence Code section 452 on request of a party if the party provides notice to the adverse party and provides the court with

“ sufficient information to enable it to take judicial notice of the matter”].)4

(1985) 39 Cal.3d 311, 318; Landmark Screens, LLC v. Morgan, Lewis & Bockius, LLP (2010) 183 Cal.App.4th 238, 240. )
We treat as true “ ‘all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.’ ” ( Blank

, at p. 3 18.)
1. AHF AHF is a nonprofit organization based in Los Angeles that provide s medicine and advocacy to over 1,250,00 people in 43
countries. Many of AHF’s clients are at risk of homelessness
and are in extremely low to moderate income households. AHF’s

“ Housing is a Human Right ” project advocates for housing policies that reduce homelessness, protect racial minorities, and avoid or reduce gentrification. AHF also provides affordable housing to lower

- income people in the Los Angeles area through
its Hea lthy Housing Foundation.
2. The Real Parties in Interest
The Real Parties in Interest (real parties) are four
unrelated real estate developers that each applied for and secured entitlements from the City to develop four different
mixed

- use development projects along Sunset Boulevard in

an area of Hollywood known as the “Hollywood Center.” The projects are known as : the Palladium p roject, the Sunset Gordon

p roject, the Crossroads p roject, and the 6400 Sunset p roject (collectively , the Projects)

. 3

3 The Palladium project belongs to real parties CH Palladium, LLC and C H Palladium Holdings, LLC (Palladium) ; t he Sunset Gordon project belongs to real party 5929 Sunset (Hollywood), LLC ( Sunset Gordo n ) ; the Crossr oads project belongs to r eal p arty CRE

- HAR Crossroads SPV, LLC (Cr ossroads) ; and the 6400 Sunset Project belongs to real party 6400 Sunset, LLC (6400 Sunset)

.5 a. The Palladium P roject The Palladium project is a 28

- story , 927,354 square foot development consisting of an 86

- foot high , 800,000 square foot parking “podium” and a pair of “luxury residential towers” with
731 condominium units and 24,000 square feet of restaurant/bar
and retail space

. The proposed site is on two surface lots located alongside and behind the Hollywood Palladium music and
entertainment buildin g

. The project will restore the Palladium building and also include 33,800 square feet of landscaped public courtyards. Ninety

- five percent of the dwelling units w il l be sold
or rented at market rate and five percent (about 37 ) of the units

w ill be reserved for “ ‘households earning between 50 and 120 percent of the area’s medi a n income.’ ” The City approved the project on March 22, 2016 after holding public hearings

. In April 2016, AHF filed a petition for writ of mandate challenging the Palladium p roject’s approvals

. The trial court entered judgment on the pleadings on some of AHF’s c laims and separately denied AHF’s petition on the remaining causes of action. O n August 29, 2019, the Court of Appeal affirmed the trial court’s judgment , and the S upreme Court denied AHF’s petition for review on November 13, 2019. b. The Sunset Gordon P roject The Sunset Gordon pro ject is a 22

- story, 324,693 square foot mixed

- use development on about 1.65 acres. It includes

a four

- story parking podium , a luxury residential tower with
299 apartments , 46,100 square feet of restaurant / bar, retail,
and office space, and a 18,962 square foot public park. Of the
299 apartments, five percent (15 units) are set aside for very
low income residents, and five percent (15 units) are set aside for6

workforce housing

. 4 The remaining apartments are market rate
units

. Sunset Gordon purchased the property in 2011 after the original developer and owner went bankrupt

. I n 2015, it applied to the City to re

- entitle the project. After holding public hearings, t he City approved the Sunset Gordon project on December 12, 2018. On January 15, 2019, Coalition to Preserve L.A. filed

a petition for writ of mandate challenging the Sunset Gordon project

. AHF joined the lawsuit a s a petitioner in an amended petition alleging additional causes of action. 5 On De cember 13, 2019, t he trial court denied the petition as to the original six
causes of action brought by Coalition to Preserve L

. A

. Trial

on the causes of action added by t he amended petition is yet to
be conducted

.

c. The Crossroads Project The Crossroads Project is a 1,381,000 square foot
mixed

- use development on about 8.34 acres a t the edge of the Crossroads of the World complex

. It consists of a 26

- story hotel

, an eight

- story parking podium

, 95,000 square feet of office space,
and 190,00 0 square feet of restauran t / bar, retail, and commercial

space . It includ es 18 proposed restaurants , a supermarket,

a 30,000 square foot movie theater, a private gym , publicly

4 Although not alleged in the complaint, according to the City’s Notice of Determination for the Sunset Gordon project, of which the court took judicial notice, the project also included 15 moderate income units.

5 On October 15, 2019, t he tr ial court granted Coalition to Preserve L.A.’s motion for leave to add AHF as a petitioner and
to file the amended petition

. The amended petit ion was not filed until December 17, 2019, however

.7

accessible courtyards

, and a “pedestrian paseo ” for outdoor

events

. The project also includes 950 dwelling units : 89 percent ( 845) are market

- rate units and 11 per cent (105) are reserved
for very low income residents. The project will demolish an apartment building with 84 units of existing rent

- stabilized housing. Forty units are to be reserved for former tenants of
the demolished apartments who qualify as very low income
households.
In November 2016, Governor Brown certified the Crossroads project as an Environmental Leadership Development
P roject (ELDP) under the Jobs and Economic Improvement Act
of 2011, Public Resources Code section 21178 et seq. The City approved the project on January 22, 2019. On February 19, 2019, AHF and another entity filed a petition for writ of mandate challenging the C ity’s approval of
the Cross roads project

. 6 The trial court denied the petition

. On July 26, 2019, t he Court of Appeal dismissed AHF’s appeal

as untimely. The Supreme Court denied AHF’s petition for
review on October 16, 2019.
d. The 6400 Sunset Project The 6400 Sunset project is a 26

- story , 231,836 square foot development with a six

- story parking podium , a luxury residential tower with 200 dwelling units

, and 7,000 square feet
of restaurant / bar and retail space. The development is proposed
on a lot “looming over the historic ArcLight Cinerama Dome.” Ninety

- five percent of the project’s dwelling units (190) will
be sold or rented at market rates and five perc ent of the units

6 Crossroads filed a notice of related case in this action. The trial court gran ted it and found the earlier petition was the lead

case.8

(10) will be set aside for very low income residents. The City approved the project on June 25, 2019

. On July 22, 2019, AHF and Coalition to Preserve L

. A

. filed a petition for writ of mandate challenging the City’s approval
of the 6400 Su nset project. The trial has not yet taken place

. 3. Hollywood Center

a. The Hollywood Community Plan In 1988, the City Council of the City of Los Angeles adopted the Hollywood Community Plan “to provide an official guide to the future development of the Community.” The Community Plan describes the Hollywood Center as the “focal point of the Community,” a nd states it “shall function . . . as the commercial center for Hollywood and surrounding communities . . . and as

an entertainment center for the entire region.” The Community Plan provides that “[f]uture development [in the Hollywood Center] should be c ompatible with existing commercial development, surrounding residential neighborhoods, and
the transportation and circulation system.” It “especially

encourage [ s ] ” “[d]evelopments combining residential and
commercial uses” in this area.
The Community Plan was implemented “to promote an arrangement of land use, circulation, and services which will encourage and contribute to the economic, social and physical health, safety, welfare, and convenience of the Community . . .; guide the development, betterment, and change of the Community to meet existing and anticipated needs and conditions; balance growth and stability; reflect economic potentials and limits, land development and other trends;
and protect investment to the extent reasonable and feasible.”
Its objectives include to (1) “coordinate the development of Hollywood with that of other parts of the City,” including, “the development of Hollywood as a major center of population,9

employment, retail services, and entertainment”; (2) “designate lands at app ropriate location s for the various private uses and public facilities in the quantities and at densities required to accommodate population and activities”; (3) “make provision for the housing required to satisfy the varying needs and desires of
all econom ic segments of the Community”; (4) “promote economic wellbeing and public convenience through: [¶] (a) allocating and distributing commercial lands for retail, service, and office space in quantities and patterns based on accepted planning principles
and s tandards.” The City found each Project is “ consistent with and/or
wi ll help to implement one or more of the” Community Plan’s objectives and goals. The City also found the Projects “to be consistent with the goals, objectives, and policies of the General
Plan Framework ,” including its objective to “[r]einforce existing and encourage the development of new regional centers that accommodate a broad range of uses that serve, provide jo b

oppo rtunities, and are accessible to the region, are compatible with adjacent land uses, and are developed to enhance urban lifestyles.” The Projects are located in an area designated as

a “Regional Center

. ” For example, the City found the Palladium pr oject consistent with the above goals and objectives because it “would enliven the Hollywood Center area by contributing

to the Regional Center’s identity through the replacement
of surface parking with the provision of new housing and commercial uses in a high quality development that reinforces
the iconic character of Sunset Boulevard, thereby enhancing
the ex i s t ing concentration of housing and amenities that serve nearby residents, the Ci ty, and which caters to tourists.”10 Together , th e four Projects will net 2,096 new housing units
with 182 of those units reserved for very low, lo w, and moderate

income households

. b. Gentrification/ Demographics 7 In 2015, the City was awar ded a grant to create a team “ to study gentrification 8 from a data

- driven perspective.” According
to the City Manager at the time, the City’s goal was “ ‘to take advantage of something that’s clearly positive: neighborhoods seeing more private investment

— and [to] ensure the current
residents and businesses in thos e neighborhoods enjoy the
benefits. ’ ” ( Emphasis omitted.) The team created “two tools

to evaluate the potential for displacement and neighborhood change” : the “ ‘Los Angeles Index of Displacement Pressure ’ ” and the “ ‘Los Angeles Index of Neighborhood Change. ’ ” 9 According to those indices, which take into account several metrics, the neighborhoods in and around the Projects’ sites
have had “high levels of change” from 2000 to 2014, reflecting “the fact that gentrification in this area has begun, and will
be exacerbated by the Projects.” Based on the City’s Index of

7 The complaint spends several paragraphs describing the factors of ge ntrification and causes of displacement , and thei r effects, as stated by various academic studies and analyses. We do not repeat those studies here.

8 The complaint defines “gentrification” as “ ‘a simultaneously spatial and social practice that results in “the transformation of a working

- class or vacant area of the central city into middle

- class residential or commercial use”

– meaning the influx of both capital (real estate investment) and high

income or

– educated residents.’ ”

9 Displacement, according to the complaint, occurs “ ‘when households are forced to move out of their neighborhood.’ ”11

Displacement Pressure, t he area surrounding the Projects
has a “ ‘Very High’ rate of displacement pressure ,” making
the “residents in the are a around the Proje ct[s] at ‘risk’ of displacement.” In the part of Hollywood where the Projects are located,
32 percent of residents are Hispanic or Latino, 12 percent are Asian, and 6 percent are Black or African American. Twenty

- one percent of the Latino population in th e area live below the poverty rate. The median household income for Latino residents is $44,492, less than the county

- wide median of $57,952, and the per capita income for Latino residents is $17,241 versus $30,798 county

- wide. 10 “Over two

- thirds of Lati no households are classified by the Department of Housing and Urban Development as ‘low income’ (income at 80% or below of the County median income), and 44% as ‘very low income’ (at or below 50% of County median).” About “half of all Latino renter househ olds a re rent

burdened, spending over 30 percent of their household income on

rent. ” The “significant” disparit y “ between non

- Hispanic whites
and Lat ino per capita income . . . show[s] that Latino residents will more likely be impacted and displaced by the Projects. ”

“ The approvals of the Projects involve at least three of
the [four] factors that lead to gentrification and displacement: they add amenities in the form of improved retail and restaurant facilities in a more attractive shopping center; they add productivity by providing office space and additional jobs in the
hotel and retail/restaurant facilities; and they provide access throughout the LA area through the ne arby Metro stations.

. . . Even though the amenities and productivity may benefit the

10 AHF drew its statistics from the U.S. Census Bureau’s American Community Survey Public U se Microdata Area for the Projects’ location within the 90028 zip code.12

area, without appropriate mitigation, these features are likely

to result in displacement of the current local community.”
Based on , among other things, t he area’s “ ‘Ve ry High’ ” risk of displacement

, “the amenities and productivity that the Project[s] will bring to the area which are shown to cause gentrification

related displacement , and the already rent

- burdened status of the Black and Latino population, the Pr ojects are likely to have a disparate impact on Black and Latino residents by increasing the likelihood that these residents will be displaced from the homes in which they currently reside.”
4. The complaint
AHF filed its complaint against the City and Cit y Council on August 8, 2019
, alleging two causes of action: (1) violation
of the FHA, 42 U.S.C. § 3601 et seq., and HUD regulations,
24 C.F.R. § 100.1 et seq. (2020) ; and (2) violation of FEHA,
Gov. Code

, § 12955 et seq. The complaint challenge s the City ’s decisions to permit construction of the Projects “without providing adequate measures to ensure that the Projects would not displace protected minorities, as required by the [FHA] and [FEHA].” AHF alleges the City approved the Projects “without
includi ng measures that will address the displacement of Black and Latino residents, such as requiring sufficient affordable housing be included in the Projects, or by requiring the provision of other permanent affordable housing elsewhere near the Project[s].” In support of its FHA claim, AHF alleges the “approval
of the Projects and the terms of their respective Conditions
of Approval consti tute policies of the City . . . ” which will disparately impact Black and Latino residents through “the gentrification of t he surrounding community by the construction of a large number of residential housing units that are unaffordable to the vast majority of current Black and Latino13

residents of the surrounding neighborhood.” AHF alleges the City’s determinations about what community benefits should
be included in the development agreements for the Projects

are “policy determination[s] made by the City in agreeing to
the terms of each” project’s development agreement, rendering “the approval of the Projects . . . a facially

- neutral policy under the FHA.” The complaint asserts the City made findings that the Projects were consistent with previously adopted City policies, including the Hollywood Community Plan, the General Plan Amendment, and the Community Redevelopment Area fo r the Hollywood Redevelopment Area. AHF alleges those listed policies “cause the disparate impacts identified in th[e] Complaint because [they] encourage development that, like
the Projects

, has the effect of displacing lower income Black
and Latino resid ents by providing amenities like ‘high quality’ restaurants, retail, and entertainment options that make the neighborhood more attractive to higher income residents, while only providing housing that is unaffordable to the vast majority
of the current Blac k and Latino residents. The Projects’ operation will lead to rising rents and increase the likelihood
that current residents will be displaced from their homes in the neighborhoods around the Projects without ho using affordable

to these residents within t he Projects themselves.” Because
the approval of the Projects “ha s an unjustified discriminatory
effect on members of minority communities” and “perp etuates segregated housing patterns because of race, color, or national origin ,” the approval of the Proje cts “violates the FHA as implemented through the HUD Regulations.” AHF makes similar allegations in support of its FEHA cause of action.14 AHF asks the court to void the City’s “ approvals ” 11 of the four projects and enjoin the City and Real Parties from “taking any action to implement the Projects” or to construct them “until such time as the City Council has issued approvals without a discriminatory effect as required by the FHA and FEHA, which

ap p rovals include measures that adequate [ sic ] mitigate for
the future displace ment of Black and Latino residents. ”
5

. The de murrers and judgment The City and r eal p arties filed separate demurrers to the c omplaint

. The Crossroads r eal p arty also filed a separate
motion for an order confirming the case is subject to California
Rules of Court , rules 3.2220 et seq . and 8.7 00 et seq., that govern ELDP litigation (ELDP rules)

. The trial court hear d oral argument on November 15, 2019

. After hearing argument, t he cou rt sustained the demurrers
without leave to amend and filed its final written ruling that

same day

. The court found the c omplaint failed to state a cause
of action against the City or the r eal p arties under the FHA and
FEHA

. The court also concluded AHF ’s c auses of action s as to the Crossroads, Palladium, and Sunset Gordon projects were barred by the statute of limitations , and the case as it relates to all four Projects was barred on res judicata (or related) grounds.
Fin ally, the trial court granted Crossroads’ ELDP motion. On

11 The “ approvals ” AHF ch allenges include “(a) an Environmental Impact Report [(EIR)] and various Errata[,] (b) a General Plan Amendment, (c) Zone and Height District Changes, (d) a Conditional Use for Alcohol, (e) a Finding of Convenience and Necessity for an Offsite Alcohol Lice nse, and Conditional Use Permits for on

- site alcohol consumption, (f) a Zoning Administrator’s Interpretation specifying front, rear and side yards, (g) a Site Plan Review, and other associated entitlements

. ”15

December 13, 2019, t he trial court entered judgment in favor
of the City and r eal p arties

. AHF appealed within the time prescribed by the ELDP
rules. Palladium, Sunset Gor don, and Crossroads filed a joint respondents’ brief and joined in the City’s respondent ’ s brief.
The City also joined in part of the joint respondents’ brief.
6400 Sunset joined in the City’s respondent ’ s brief

. DISCUSSION
1. Standard s of review “On appeal from a judgment after a demurrer is sustained without leave to amend, we assume the truth of the properly pleaded factual allegations, facts that reasonably can be inferred from those expressly pleaded, and facts of which judicial notice can be taken.” ( Syngenta Crop Protection, Inc. v. Hel liker (2006) 138 Cal.App.4th 1135, 1181.) “[W] e give the complaint

a reasonable interpretation, and read it in context. ” ( Schifando

v. City of Los Angeles (2003) 31 Cal.4th 1074, 108 1 ( Schifando ) .) “[W]e examine the complaint de novo to determine whethe r it alleges facts sufficient to state a cause of action under any legal theory.” ( McCall v. PacifiCare of Cal

. , Inc. (2001) 25 Cal.4th 412, 415.) “ If the complaint fails to plead, or if the defendant negates, any essential element of a particular cause of action, this court should affirm the sustaining of a demurrer. ” ( Consumer Cause, Inc. v. Arkopharma, Inc. (2003) 106 Cal.App.4th 824, 827 .) We also “ must decide whether there is a reasonable possibility the plaintiff could cure the defect with an amend ment. [Citation.] If we find that an amendment could cure the defect,
we conclude that the trial court abused its discretion and we reverse; if not, no abuse of discretion has occurred. [Citation.] The plaintiff has the burden of proving that an amendment
would cure the defect. [Citation.] ” ( Schifando

, supra , 31 Cal.4th at p. 1081. )16

2. The complaint fails to state a cause of action for violation of the FHA and FEHA as a matter of law

a. Disparate

- impact theory of liability
The FHA makes it u nlawful to “refuse to sell or rent . . .

or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin.” (42 U.S.C. § 3604(a).) “A dwelling can be made otherwise unavailable by, among other things, action that limits the availability of affordable housing.” ( Mt. Holly Gardens Citizens in Action, Inc. v. Township of Mt

. Holly (3d Cir. 2011) 658 F.3d 375, 381 (Mt. Holly ) .) The statute was ena cted to “eradicate discriminatory practices within [the housing] sector
of our nation’s economy.” ( Texas Dept. of Housing & Community Affairs v. Inclusive Communities Project, Inc. (2015)

__ U.S.

__,

__ [ 135 S.Ct. 2507, 2521 ] ( Inclusive Communities ).)
AH F alleges a disparate

- impact claim under both the FHA
and FEHA. 12 A disparate

- impact claim challenge s “ practices
that have a ‘disproportionately adverse effect on minorities’ and

are otherwise unjustified by a legitimate rationale.” ( Inclusive
Communit ies , supra, 135 S.Ct. at p. 2513 ; 24 C.F.R. § 100.500 (a) (2020) [ “A practice has a discriminatory effect where it actually or predictably results in a disparate impact on a group of persons or creates, increases, reinforces, or perpetuates segregated
housi ng patterns because of race, color . . . or national origin

. ” ]. )

12 The Legislature sought to make FEHA substant ially equivalent to the FHA and its amendments. ( Sisemore v. Master Financial, Inc. (2007) 151 Cal.App.4th 1386, 1421, 142 0 .) “Accordingly, ‘[c]ourts often l ook to cases construing the FHA

. . . when interpreting FEHA.’ ” ( Id. at p. 1420. ) We address, as the parties and trial court did, the two claims together and intend our references to the FHA also to cover FEHA.17

Disparate

- impact claims are cognizable under both the FHA and
FEHA . ( Inclusive Communities , at p. 2525 ; Sisemore, supra

, 151 Cal.App.4th at p. 1423

. ) Suits challenging “zoning laws
and other housing restrictio ns that function unfairly to exclude minorities from certain neighborhoods without any sufficient justification. . . . reside at the heartland of disparate

- impact liability.” ( I

nclusive Communities, at pp. 2521

- 2522.) Although the Supreme Court in Inclusive Communities recognized disparate

- impact liability under the FHA , it cautioned that the “FHA is not an instrument to force housing authorities to reorder their priorities. Rather, the FHA aims to ensure that those pr iorities can be achieved without arbitrarily creating discriminatory effects or perpetuating segregation.” ( Inclusive Communities, supra , 135 S.Ct. at p. 252 2 .) The Court thus held “[g]overnmental or private policies are not contrary to the disparate

- imp act requirement unless they are ‘artificial, arbitrary, and unnecessary barriers

. ’ ” ( Id. at pp. 2522, 2524 .) The Court also explai ned , “a disparate

- impact claim that
relies on a statistical disparity must fail if the plaintiff cannot point to a defendan t’s policy or policies causing that disparity.
A robust causality requirement ensures that ‘[r]acial imbalance

. . . does not, without more, establish a prima facie case of disparate impact’ and thus protects defendants from being
held liable for racial disparities they did not create.” ( Inclusive Communities, supra, 135 S.Ct. at p. 2523.) The Supreme Court
directed courts to “ examine with care whether a plaintiff has made out a prima facie case of disparate impact . . . . A plaintiff
who fails to allege facts at the pleading stage or produce statistical evidence demonstrating a causal connection cannot make out a prima facie case of disparate impact .” ( Ibid. ) The Supreme Court emphasized these “limitations on disparate

- impact liability

. . . ar e also necessary to protect18

potential defendants against abusive disparate

- impact claims

. ” ( Inclusive Communities, supra , 135 S.Ct. at p. 2524.) Finally,
the Court noted “[r]emedial orders in disparate

- impact cases
should concentrate on the elimination o f the offending practice that ‘arbitrar [ily] . . . operate[s] invid iously to discriminate on
the basis of rac[e].’ ” ( Ibid .) With these principles in mind, we consider AHF ’s alleged theory of disparate

- impact liability.
b. AHF has not alleged a policy that is an “ artificial, arbitrary, and unnecessary barrier [ ]” to fair housing
AHF initially contends the c omplaint alleges the existence of a policy or practice , challenging the City’s argument that
the alleged policy is too vague or constitutes the lack of a policy

. As a rticulated by AHF, “the City’s specific implementation of the Hollywood Community Plan and its approval of these four major projects constitutes various polic ies and decisions

. ” It contends the City approved the Projects after “numerous negotiations [and] determinations, ” including zoning waivers and the granting of conditional use permits, and imposing certain “ conditions ,”
all of which constitute “policy decisions, made to implement
the Hollywood Community Plan. ” We agree that AHF has sufficiently alleged the existence
of a City policy or practice, at this early pleading stage. For example, i n Mhany Management v. County of Nassau (2016)
819 F.3d 581, 619 ( Mhany )

, the Second Circuit concluded a City’s
decision t o re zone an area for single family dwellings rather than
multi

- family dwellings

— that affected one piece of property

— fell “within a classification of a ‘general policy

, ’ ” where the zoning change involved months of hearings and meetings

, consideration
of objec tions , and the passage of a local la w. (See also Avenue 6E Investments, LLC v. City of Yuma ( D.Ariz

. Jan. 29 , 2018, 2: 09

- cv

00297 JWS ) 2018 U.S. Dist. Lexis 14913 at * 19

- 20 ( Avenue 6E

)19

[ finding a city was “setting policy ” in an area by denying a rezoning request to allow for smaller lots ; denial “involved hearing s and discussions as to how neighboring developments
in the area would be affected and also directly resulted in

a change to the adjacent property’s zoning to ensure future development in that area was reserved for the largest lots”].)
The c omplaint makes similar express and implied allegations about the City’s approval of the Projects to revitalize
the area

. AHF alleges the approval process for the Projects was “lengthy,” and included debate “in public hearings and in written
communications” about what “ community benefits ” should be
included as part of the development agreements ( presumably between the City and the Projects’ developers )

. AHF also alleges the City approved the Projects, including granting various land

use entitlements

, to “aid in the implementation ” of the City’s existing land use policies, including the Hollywood Community Plan, the General Plan Amendment, and the Community Redevelopment Area for the Hollywood Redevelopment Area.
A ccepting these allegations as true

, the City’s approval of the Projects made in the context of implementing its land use plans
can be classified as a policy

. Whether t he complaint alleges a policy tha t is an

“ ‘artificial , arbitrary, and unnecessary barrier[ ]’ ” to fair housing is another matter. In essence AHF alleg es the City’s implementation of its land use policy by approving “these four large, upscale, multiuse p rojects within a one

- mile radius ”

— without re quiring measures to mitigate against the displacement of minority residents

— creates a barrier to fair housing because the Projects will lead to gentrification and thereby drive rents up, disparately displacing Latino and Black residents who will be unable to afford the higher rents.20 The City contends there is no barrier to housing for t he

court to r emove because its approval of the Projects create s housing

— both market rate and income

- restricted unit s

. 13 We do

not agree that the creation of housing alone is an absolute shield from disparate

- impact liability. After all, in Mhany

, the city ’s
decision to rezone an area for single

- family dwellings

— instead
of multi

- family housing

— open e d the door for the construct ion of housing where none had existed due to t he area’s former public zone designation

. ( Mhany, supra

, 819 F.3d at p p

. 589
, 597

- 598 .)
But there, t he city’s shift from zoning for multi

- family to single

family housing decreased the availability of affordable housing in the area, which disparately impacted minorities

. ( Id. at pp. 59 8,
619

- 620 .) Nevertheless, as the City argues, its alleged discriminatory pol icy is missing a key feature of the policies examined in the cases relied on by AHF: the City’s approval of the Projects
neither prohibit s the construction of affordable housing in
the area nor physically remove s affordable housing to make

way for more expen sive housing or other uses

. AHF relies on Mhany, supra , 819 F.3d 581; Avenue 6E,

supra , 2018 U.S. Dist. Lexis 14913 ; and Mt. Holly, supra , 658 F.3d 375. In M

hany , the zoning decision prevented the building
of multi

- family dwellings ther eby decreasing the availability
of housing for minorities where affordable housing already was scarce. ( Mhany

, at p p

. 588
, 620 .) The c ourt of a ppeal s thus affirmed the district court’s finding that the plaintiffs established a prima facie case of disparate

- impact liability under the FHA

.

13 A s alleged by AHF, the City’s approval of the Projects will result in a net increase of 2,096 residential units, at least 182 of which will be income

- restricted.21

( Id. at p. 620. ) In other words, the restriction on the development
of multi

- family housing created a barrier to fair housing

. Similarly, in Avenue 6E

, the city’s denial of a developer’s request to rezone an area to allow for smaller lots prevented the building of affordable or moderately priced homes that allegedly “exclude [ d ] Hispanic homebuyers from [ the ] area

. ” ( Avenue 6E,

supra , 2018 U.S. Dist. Lexis 14913 at * 3

- 5, 18, 24 [deny ing ci ty’s motion for summary judgment on plaintiffs’ disparate

- impact claim under the FHA].) Finally, in Mt. Holly

, the Third Circuit
reversed an order granting summary judgment on residents’ disparate

- impact claim under the FHA where their township implemented a redevelopment plan that “would eliminate

e xisting ho mes in [ a neighborhood ], occupied predominately by
low

- income residents , and replace them with significantly more expensive housing units

. ” The rep lacement housing was “well outside the range of affordability for a significant portion of the
African

- American and Hispanic residents.” ( Mt

. Holly

, supra , at

pp. 377 , 379

- 380 [ concluding district court misapplied standard

to determine whether residents could establish a prima facie disparate

- impact case].) In other words, in all of the se cases the defendant’s policy affirmatively prevented the building of or removed
affordable housing in areas where minority residents were disproportio nately affected. The City’s approval of the Projects
here does not. AHF responds it has alleged a barrier to housing for a protected class because the Projects will (1) demolish existing “rent

- controlled housing occupied by a significant
number of minorities”; (2) create housing “disproportionately unavailable and unaffordable to a protected group”; and (3) “cause[ ] the disproportionate displacement of a protected group by making surrounding housing unaffordable (thus eliminating previously existin g affordable housing).” A ssuming22

the truth of th e se allegations

, AHF has no t alleged the City’s approval of the Projects

— and its decisions and implementation
of l and use policies that went with it

— is itself a barrier to fair housing as I

nclusive Communities requires

. 14
i. AHF has not alleged the City’s policy restricts affordable housing First, AHF has not alleged the City h as restricted the building of affordable housing in the area through zoning

,

an ordinanc e, or other land use decision, as part of its approval
of the Projects

. AHF does not allege, for example, that the City applied a zoning or other land use law effectively to preclude
construction of affordable housing in the area , as in Mhany’s
restriction on multi

- family dwellings or Avenue 6E’s lot

- size
restrictions. Moreover, in both Mhany and Avenue 6E , the
cities were faced with development proposals requiring a less restrictive zoning designation to enable the construction of more afforda ble housing than the ultimate designations allowed. AHF
does not suggest the City ’s approval of the Projects prevent ed

a competing development from constructing affordable housing.

14 In discussing causation, AHF argues that, for purposes of establishing a prima facie case, the HUD regulations

— left intact by Inclusive Communities

— require it to allege only that the City’s policy “predictably will cause a discriminatory effect on

a protected class.” ( Citing 24 C.F.R. § 100.500(c)(1) .) While we need not address the parties’ causation arguments, Inclusive Communities made cle ar “[g]overnmental . . . polices are not contrary to the disparate

- impact requi rement unless they are

‘ artificial , arbitrary, and unnec essary barrier s .’ ” ( Inclusive Communities, supra , 135 S.Ct. at p. 2524 , italics added .) Accordingly, as part of its prima facie case, AHF must plead the City’s policy itself is the barrier to fair housing

.23 Second, AHF has not alleged what actual restrictions
the City’s approval of the Projects places on access to affordable housing. Instead, under AHF’s gentrification theory

, the City’s development policy has disproportionately limited the availability of housing to Latino s by “making surrounding housing unaffordable.” AH F theorizes the “upscale” Projects
will revitalize the area causing rents to rise as higher

- earning
residents are attracted t o the developments

. Latinos will be disproportionately displace d from the area as they no longer
will be able to afford their current housing and cannot afford
the new marke t rate housing the Projects will create. Assuming the Projects will cause a rise in surrounding

rents and disproportionately impact Lati nos as AHF portends, AHF has not alleged the City’s implementation of its land use plan is the barrier to affordable housing. Rather, the anticipated barrier to affordable housing rests in the hands of private third parties

. AHF alleges the possibility of private landowners raising

rents as property valu es in the area increase when the Projects
are built

. Of course, l andlords could raise rents

— or not

— due to
other socio

- economic forces, too

. Nonetheless, t he City’s land use
decisions and policies associated with its approval of the Projects
themselves do not impose higher rents, do not physically reduce the number of available affordable housing units, and do not preclude the development of affordable housing units. In the
absence of the City placing actual restricti ons on housing, w e cannot conclude the City’s approval of the Projects is actionable
under the FHA or FEHA based on the reduction of affordable housing units as a result of private actors’ anticipated increase
of rents due to the revitalization of the area stemming from new development.

ii. T he City’s approval of the Projects do es
not eliminate housing24 AHF alleges minorities disproportionately will be unable

to afford most of the new housing the Projects will construct,
but that new housing will not eliminate e xisting housing.
The market rate housing the Projects will build does not replace existing, occupied housing: the Palladium project will be built

on an empty parking lot; the Sunset Gordon project will re

- open an already built tower that has sat vacant f or about three years with empty housing units; the Crossroads project creates new income

- restricted units with a net increase in affordable housing ; and the 6400 Sunset project will be built on a lot with no current housing units. Accordingly, the new market rate units will not displace current residents who cannot afford them because they do not replace existing affordable units.
As AHF a lleges, and the City does not dispute, the Crossroads project will result in the destruction of an existing

rent

- stabilized apartment building. The 84 rent

- stabilized units
slated for demolition , however, will be replaced with 105 units
restricted for ver y

- low income households. 15 Rather than reduce available affordable housing, the replacement of the existing building will increase the number of affordable housing units

on that site. And, 40 of those new units will be reserved for former tenants of the demolished building. In stark contrast to
Mt. Holly , t he City’s policy does not remove existing affordable

15 The City notes that units subject to its rent stabilization ordinance are not income restricted. (L

. A

. M un. C ode, c h. 15, § 151.00 et seq. ) The ordinance protects tenants from excessive rent increas es, but allows “landlords to re

- set rent to market rates in several circumstances, including, when units are voluntarily vacated.” (See, e.g., id

., § 151.06(C)1.(a).) The new construction not only will add 21 affordable units to the area, but the 84 unit s replaced with income

- restricted units arguably will be more affordable than they are now

.25

housing to make way for less affordable housing ; thus it cannot be classified as a barrier to housing under the FHA. 16

iii. AHF see ks to impose a new development policy on the City, rather than to eliminate one Finally, as we have noted, the “FHA is not an instrument

to force housing authorities to reorder their priorities.” ( Inclusive
Communities , supra , 135 S.Ct. at p. 2522.) Here, the remedy
AHF seeks

— the halting of the Projects until the City initiates measures to mitigate the effects of gentrification

— is precisely
the type of remedy Inclusive Communities explained the FHA was not intended to impose. AHF would have the court force
the City to “reorder” its development priorities by requiring

,

16 Moreover, in the February 2019 Crossroads petition for writ of mandate

, AHF litigated and lost its contention that the City did not sufficiently mitigate the los s of affordable housing from the demolition of the rent

- stabilized building, and that the project failed to provide sufficient affordable housing. In denying the petition, the superior court found AHF’s “evidence of affordable housing shortages in the [Ho llywood Redevelopment Area] is lacking.” The trial court concluded that, “even if Petitioners substantiated a severe affordable housing shortage,” the Community Development Law provisions relating to providing affordable housing as part of a redevelopment project “did not compel the City to condi tion the [Crossroads project’s] approvals on the inclusion of more affordable housing.” Rather, the statute in question, Health and Safety Code section 33413, require s the City to produce the required number of income

restricted housing units anywhere wit hin the Hollywood Redevelopment Area

— not the Crossroads project’s site itself

— within the City’s discretion. And, because the redevelopment agency’s implementation plan d oes not expire until May 7, 2027, the City ha s another seven years to satisfy the requ irement.26

for example, additional affordable housing to be built within or

near the Projects

, as opposed to some other area. Rather, disparate

- impact liability under the FHA should “sole l y ‘remov [e] . . . artificial, arbitrary, and unnec essary barriers.’ ” ( Inclusive Communities, supra , 135 S.Ct. at p. 2524.)
Eliminati ng the City’s alleged “offending” policy

— its approval of the Projects

— would not make affordable housing more available to minorities, however. As we have discussed, the Projects add affordable housing units to the area’s existing supply. Thus, declaring the City’s approval o f the Projects void will serve only

to reduce the number of existing income

- restricted housing units

, rather than provide greater access to affordable housing , as contemplated by the FHA

. No one disputes the existence of gentrification or its potential ill effects. But

, in the absence of a policy that actually
limits the availability of affordable hou sing

, AHF ’s remedy is

to petition the City or the Legislature to enact laws or policies

to counteract the future effects of gentrification

. The FHA and
FE HA, however, were designed not to impose land use policies

on public and private actors, but rather to eliminate those policies that are barriers to fair housing. AHF has not alleged such

a policy exists here.
B ecause we conclude the City’s approval of the Projects
is not actionable as a matter of law under the FHA or FEHA

on the ground it does not constitute a policy that is an artificial, arbitrary, or unnecessary barrier subject to disparate

- impact liability , we need not consider the parti es’ other arguments or the other grounds on which the trial court sustained the demurrers

. Having affirmed the judgment, we also need not consider AHF’s
contention the trial court erred when it confirmed this action is subject to the EL D P rules.27

3. The trial court did not abuse its discretion by denying
AHF leave to amend When a demurrer is sustained without leave to amend,
the plaintiff bears the burden of proving there is a reasonable possibility of amendment. To satisfy that burden on appeal, a

p laintiff “must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading.” ( Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.)
The assertion of an abstract right to amend does not satisfy
this burden. ( McKelvey v. Boeing North American, Inc . (1999)
74 Cal.App.4th 151, 161.) Further, the plaintiff must set forth factual allegations that sufficiently state all required elements
of that cause of action. ( McMartin v. Children's Institute
International (1 989) 212 Cal.App.3d 1393, 1408.) Allegations must be factual and specific, not vague or conclusory. ( Cooper

v. Equity Gen. Insurance Co. (1990) 219 Cal.App.3d 1252, 1263

- 1264.) Here, AHF has set forth vague or conclusory factual allegations to satisfy it s burden of showing that there is a reasonable possibility that it can amend the legal effect of its complaint. For example, while it states it can plead more robust statistics regarding the disparate impact of displacement on Latinos, it offers no specif ic allegations to support the possibility of amendment and no legal authority showing the viability of

new or amended causes of action. 17 Indeed, in its reply brief,

17 At oral argument AHF’s counsel suggested it could amend its complaint to plead additional facts to support the complaint’s conclusory allegation that the City’s “ approval of the Projects

. . . perpetuates segregat ed housing patterns ” in violati on of the FHA

. A rguably, some Latino residents in the area will be unable to afford the market rate units in the Projects’ new “upscale”28

AHF asks this cour t to “provide guidance” as to what additional evidence may be required under Inclusive Communities

. Of course, the burden of showing that a reasonable possibility exists that amendment can cure the defects remains with the plaintiff;
neither the trial cou rt nor this court will rewrite a complaint. ( Gould v. Maryland Sound Industries, Inc . (1995) 31 Cal.App.4th 1137, 1153.)
DISPOSITION The judgment is affirmed. In the interests of just ice , the parties are to bear their own costs on appeal

.

CERTIFIED FOR PUBLICATION

EGERTON , J.

We concur:

LAVIN, Acting P. J. DHANIDINA, J.

buildings. But AHF has not said how the unaffordability of the new units perpetuates segregation in the area when currently a disproportionate number of the residents are minorities. Put differently, AHF offers no specific facts explaining how making the area less segregated and more socioeconomically diverse violates the FHA or FEHA

.