Source: https://caselaw.findlaw.com/ca-court-of-appeal/1077003.html
Timestamp: 2019-04-18 17:35:32+00:00

Document:
PALMER/SIXTH STREET PROPERTIES, L.P., et al., Plaintiffs and Respondents, v. CITY OF LOS ANGELES, Defendant and Appellant.
Rockard J. Delgadillo, City Attorney, Jeri L. Burge, Assistant City Attorney, Tayo A. Popoola and Michael L. Bostrom, Deputy City Attorneys, for Defendant and Appellant. ACLU Foundation of Southern California, Peter Bibring, Peter J. Eliasberg, and Mark D. Rosenbaum, Los Angeles; Western Center on Law & Poverty, Richard Rothschild, Los Angeles, and Lynn Martinez, Vallejo; Legal Aid Foundation of Los Angeles and Christian Abasto; California AffordableHousing Law Project, Public InterestLaw Project and Michael Rawson; Public Counsel and Shashi Hanuman; and Bet Tzedek Legal Services and Michelle Marie Kezirian for Amici Curiae Southern California Association of Non-Profit Housing and The Association of Community Organizations for Reform Now on behalf of Defendant and Appellant. Costell & Cornelius Law Corporation, Jeffrey Lee Costell, Alexandre Ian Cornelius, Santa Monica, Mitchell E. Rishe, Los Angeles, and Sean M. Cronin for Plaintiffs and Respondents.
The superior court issued a writ of mandate that precludes appellant City of Los Angeles (the City) from enforcing an affordable housing ordinance against a mixed use project that is being developed by respondents Palmer/Sixth Street Properties, L.P., and Geoffrey Palmer (jointly, Palmer). The superior court concluded that, as applied to Palmer's proposed project, the affordable housing ordinance conflicts with and is preempted by the vacancy decontrol provisions of the Costa-Hawkins Rental Housing Act (Civ.Code, § 1954.50 et seq. (the Costa-Hawkins Act or the Act)), which allows residential landlords to set the initial rent levels at the commencement of a tenancy. The City has appealed from the judgment, which we affirm.
This litigation concerns the City's conditional approval of a mixed use project (Piero II or the project) that Palmer plans to build within the Area. The site is currently used as a parking lot, but it previously contained a 60-unit low income apartment hotel that was demolished in 1990. The City conditionally approved the project subject to Palmer's compliance with section 11.C's affordable housing requirements, but Palmer contends the requirements conflict with and are preempted by the Costa-Hawkins Act. As previously mentioned, the Costa-Hawkins Act's vacancy decontrol provisions allow residential landlords to set the initial rent levels at the commencement of a tenancy. The Plan, on the other hand, requires either the construction of affordable housing units that are subject to rent restrictions for the life of the units or for 30 years, whichever is greater, or the payment of an in lieu fee that the City will use to build affordable housing units elsewhere. The dispositive issue, both below and on appeal, is whether the City's application of section 11.C's affordable housing requirements to the Piero II project conflicts with and is preempted by the Act.
In 2006, Palmer applied for approval of the Piero II project, which will include “350 residential units and 9,705 square feet of commercial space on 2.84 acres, consisting of 11 separate, contiguous lots.” Because the project site formerly contained a 60-unit low income apartment hotel that was demolished in July 1990, the City concluded that the project falls within the scope of section 11.C's replacement dwelling requirements.
Palmer further argued that because it was not “applying for any additional incentives” or receiving “any form of any government support,” the project should be exempted from section 11.C's affordable housing requirements. (See Civ.Code, § 1954.52, subd. (b) [the Costa-Hawkins Act “does not apply where the owner has otherwise agreed by contract with a public entity in consideration for a direct financial contribution or any other forms of assistance specified in Chapter 4.3 (commencing with Section 65915) of Division 1 of Title 7 of the Government Code”].) Although both the Costa-Hawkins Act and section 11.C permit developers to obtain density bonuses,7 Palmer pointed out that it has no need for a density bonus, because the project involves “approximately 40% fewer ” units than are allowed by the zoning ordinances.
The local planning commission, the planning and land use management committee, and the city council reviewed Palmer's waiver request. At each level, the waiver was denied on the ground that the site formerly contained a 60-unit low income apartment hotel that was destroyed within the time period covered by the Plan.
The City's planning and land use management committee reviewed the administrative record and, after conducting a public hearing, sustained condition 10 of the project approval. The city council also considered the matter and, after conducting a hearing, adopted the committee's recommendation and denied the administrative appeal.
Following the denial of its administrative appeal, Palmer filed the present complaint for administrative writ of mandate, damages, and declaratory and injunctive relief.10 In the mandamus claim, which is the only claim at issue on appeal, Palmer alleged that the application of section 11.C's affordable housing requirements to the project violated both the Costa-Hawkins Act and the Mitigation Fee Act. (Gov.Code, § 66000 et seq.) The superior court stayed the other causes of action pending a hearing on the mandamus claim.
The superior court concluded that applying section 11.C's affordable housing requirements to the project would be fatally inconsistent with the Costa-Hawkins Act. The superior court rejected the City's alternative argument to enforce section 11.C's “in lieu” fee provision as a stand-alone fee provision, while striking the preempted provisions from the rest of the ordinance. The superior court concluded that the fee provision was so inextricably intertwined with the preempted provisions of the ordinance that severing the fee provision was not a viable option.
Following Palmer's dismissal of the non-mandamus claims, the superior court entered a judgment: (1) requiring the City to set aside, eliminate, and not enforce condition 10 of the project approval; and (2) prohibiting the City from applying section 11.C's affordable housing requirements to the Piero II project. The City has appealed from the judgment.
The City contends that the judgment must be reversed because the affordable housing requirements that were imposed in condition 10 of the project approval do not conflict with the Costa-Hawkins Act. For the reasons that follow, we disagree.
We disagree that the issue was rendered moot by the amended pleading. The amendment simply clarified that an adverse ruling on the complaint would result in the payment of the in lieu fee rather than the construction of low income housing units. This clarification did not constitute a waiver or forfeiture of any of the complaint's substantive allegations. Accordingly, we reject the City's argument.
In contrast with the above cases, Division Three of this district recently concluded that the Costa-Hawkins Act did not preempt the City's rent recontrol ordinance, which “provides that if a landlord demolishes residential property subject to City's rent control law, and builds new residential rental units on the same property within five years, the newly constructed units are also subject to the rent control law.” (Apartment Assn. of Los Angeles County, Inc. v. City of Los Angeles (2009) 173 Cal.App.4th 13, 17, 92 Cal.Rptr.3d 441.) The ordinance was authorized by the Ellis Act (Gov.Code, § 7060 et seq.), which predates the Costa-Hawkins Act. The Ellis Act, which allows residential landlords to evict their tenants and go out of business if they comply with certain procedural requirements, was amended to include recontrol provisions that prevent landlords from evicting tenants under the pretext of going out of business and then re-leasing the units at an unregulated rental rate within the next five years. (Gov.Code, § 7060.2, subd. (d).) Division Three concluded that the Costa-Hawkins Act neither impliedly repealed the Ellis Act (Gov.Code, § 7060.2, subd. (d)), nor preempted the ordinance. (Apartment Assn. of Los Angeles County, Inc. v. City of Los Angeles, supra, 173 Cal.App.4th at pp. 25-30, 92 Cal.Rptr.3d 441.) In this case, however, the Ellis Act does not apply because more than five years have elapsed since the former residential rental units were demolished on the site.
The Legislature in the Costa-Hawkins Act clearly stated that “[n]otwithstanding any other provision of law,” all residential landlords may, except in specified situations, “establish the initial rental rate for a dwelling or unit.” (Civ.Code, § 1954.53, subd. (a).) Section 11.C, on the other hand, requires Palmer to provide 60 affordable housing units at regulated rent levels that must be preserved for the life of the dwelling units or 30 years, whichever is greater.
A local ordinance is “ ‘contradictory’ to general law when it is inimical thereto.” (Sherwin-Williams Co. v. City of Los Angeles, supra, 4 Cal.4th at p. 898, 16 Cal.Rptr.2d 215, 844 P.2d 534.) We find section 11.C's affordable housing requirements to be hostile or inimical to Civil Code section 1954.53 by denying Palmer the right to establish the initial rental rates for the affordable housing units that are required to be built under section 11.C, and by preserving their regulated rent levels for 30 years or the life of the units, whichever is greater.
Although the Costa-Hawkins Act does not apply when “[t]he owner has otherwise agreed by contract with a public entity [to build affordable housing] in consideration for a direct financial contribution or any other forms of assistance specified in Chapter 4.3 (commencing with Section 65915) of Division 1 of Title 7 of the Government Code” (Civ.Code, § 1954.53, subd. (a)(2)), there is no such agreement in this case. Because Palmer has refused to build affordable housing units under any circumstances, the issue is whether requiring Palmer's involuntary compliance with section 11.C's affordable housing requirements is hostile or inimical to Palmer's right under the Costa-Hawkins Act to establish the initial rental rates for the project's dwelling units. We conclude that it is.
Under the plain meaning rule of statutory construction, if the language of the statute “ ‘is clear and unambiguous our inquiry ends. There is no need for judicial construction and a court may not indulge in it. [Citation.] “If there is no ambiguity in the language, we presume the Legislature meant what it said and the plain meaning of the statute governs.” [Citation.]’ (Diamond Multimedia Systems, Inc. v. Superior Court (1999) 19 Cal.4th 1036, 1047 [80 Cal.Rptr.2d 828, 968 P.2d 539].)” (El Dorado Palm Springs, Ltd. v. City of Palm Springs (2002) 96 Cal.App.4th 1153, 1161, 118 Cal.Rptr.2d 15.) Applying this rule to Civil Code section 1954.53, subdivision (a), we find that it is clear and unambiguous. According to its plain language, the Costa-Hawkins Act provides in relevant part that, “[n]otwithstanding any other provision of law,” all residential landlords may, except in specified situations, “ establish the initial rental rate for a dwelling or unit.” (Civ.Code, § 1954.53, subd. (a).) Forcing Palmer to provide affordable housing units at regulated rents in order to obtain project approval is clearly hostile to the right afforded under the Costa-Hawkins Act to establish the initial rental rate for a dwelling or unit.
The City argues that section 11.C does not conflict with the Costa-Hawkins Act because section 11.C is not a rent control statute that governs the entire rental housing market. According to the City, section 11.C does not violate the Costa-Hawkins Act because it simply mandates either the replacement of the 60 affordable units that were demolished on the project site in 1990, or the payment of an in lieu fee. We are not persuaded. Section 11.C must be read in conjunction with section 11.E, which directly conflicts with the Costa-Hawkins Act's vacancy decontrol provisions by imposing rent restrictions on the units required to be built under section 11.C. Not only does section 11.E clearly restrict the initial rents for those units, but it imposes deed restrictions to control the rents “for the life of the dwelling units or for 30 years, whichever is greater.” Accordingly, it is plain that the Plan imposes rent restrictions that conflict with and are inimical to the Costa-Hawkins Act, even if those restrictions apply only to a portion of the residential units within the project and does not control the rents for the entire project.
The City further argues that section 11.C's in lieu fee provision does not conflict with the Costa-Hawkins Act, which does not mention impact fees. In our view, however, the in lieu fee provision does not eliminate the conflict between the Costa Hawkins Act and the Plan's affordable housing requirements. Although the fee option provides an alternative to the Plan's affordable housing requirements, because the fee amount is based solely on the number of affordable housing units that a developer must provide under the Plan, the Plan's affordable housing requirements and in lieu fee option are inextricably intertwined. The objective of section 11.C is not to impose fees, but to impose affordable housing requirements that may be satisfied by paying fees that the City concedes are “in lieu of the set-aside provisions, not the other way around.” 13 Because the affordable housing requirements conflict with and are inimical to the Costa-Hawkins Act, it necessarily follows that the in lieu fee provision, which exists only within the context of the preempted affordable housing requirements, is also preempted by the Act.
Finally, the City asserts that because Palmer has the option of building fewer than 10 units per lot, which would remove the project from the scope of section 11.C's affordable housing requirements, there is no conflict between the affordable housing requirements and the Costa-Hawkins Act. This contention ignores the fact that because the project complies with applicable zoning laws, Palmer has no need for a density bonus or other assistance in return for complying with section 11.C's affordable housing requirements. That Palmer could avoid section 11.C's requirements by limiting the number of residential units per lot does not eliminate the conflict that exists between the Plan and the Act.
The judgment is affirmed. Palmer is awarded its costs on appeal.
2. The Plan defines a “mixed use” project as “[a]ny Project which combines a commercial use with a residential use, either in the same building or in separate buildings on the same lot or lots.” (Plan, § 4, Definitions.)Although the Plan also imposes affordable housing requirements on commercial and industrial projects, those requirements are beyond the scope of this opinion, which is limited to the mixed use project at issue.
8. According to the record, the “in lieu” fee was adjusted in 2006 to $122,632.02 for very low income dwelling units, and $96,182.17 for low income dwelling units.
10. Palmer also filed a concurrent federal district court action that, according to Palmer's respondent's brief, involves “essentially the same constitutional claims as were asserted in Palmer's Superior Court Complaint.” According to Palmer, the federal action was stayed pending the outcome of this action.
11. ACORN and SCANPH have filed an amicus brief in this appeal in support of the City. Palmer has filed a response to their brief.
12. Additionally, Palmer argued that section 11.C's affordable housing requirements violated the Mitigation Fee Act because it “prohibits a local agency from imposing an exaction (here, the [replacement dwelling provisions] requiring the setting aside or building of 60 affordable units or the payment of in lieu fees of $96,182.17 per unit) as a condition of approval of a local development project, unless the local agency makes a determination that there is: [¶] (i) ‘a reasonable relationship between the fee's use and the type of development project on which the fee is imposed’ [Gov.Code, § 66001, subd. (a)(3)]; [¶] (ii) ‘a reasonable relationship between the need for the public facility and the type of development project on which the fee is imposed’ [Gov.Code, § 66001, subd. (a)(4)]; and/or [¶] (iii) ‘[a] reasonable relationship between the amount of the fee and the cost of the public facility attributable to the development on which the fee is imposed’ [Gov.Code, § 66001, subd. (b) ].' (Emphasis added.)” The trial court did not reach this issue.
13. The City argues that focusing on the fact that the in lieu fee provision follows the set-aside provision “does nothing more than elevate form over substance. It contends the ordinance would not violate the Costa-Hawkins Act if the set-aside provision were an in lieu option to the fee. We are not persuaded. The only way the builder could avoid the fee would be to permit itself to be bound by a set-aside provision that is illegal under the Act. Thus, the fee would still exist as part of an overall plan that is preempted by the Act.
15. In light of our determination that the in lieu fee option is preempted by the Costa-Hawkins Act, we need not reach the City's remaining contention that the fee option does not violate the Mitigation Fee Act.
We concur: WILLHITE, Acting P.J., and MANELLA, J.

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