Wollmer v. City of Berkeley (193 Cal. App. 4th 1329, 2011)

Opinion

REARDON, J.

Appellant Stephen Wollmer asks this court to reverse the denial of his petition for administrative mandamus challenging two approvals by respondents City of Berkeley and the Berkeley City Council (collectively, the City) for a mixed-use affordable housing or senior affordable housing project located at 1200 Ashby Avenue. Specifically, he denounces the approvals as violative of the state’s density bonus law as well as the California Environmental Quality Act (CEQA). We conclude the trial court properly denied the petition and entered judgment in favor of the City; accordingly, we affirm the judgment.

I. FACTUAL BACKGROUND

The site of the proposed projects at 1200 Ashby Avenue consists of 0.79 acres, located at the southeast comer of San Pablo Avenue and Ashby Avenue in Berkeley. Currently vacant, the northern portion of the site previously was a gas station, and the soil has been remediated. The area generally has been developed with one- and two-story commercial and mixed-use buildings. It abuts a lower density residential neighborhood to the east and a light industrial/commercial district to the west.

A. The Affordable Housing Project

In November 2007, real parties in interest submitted an application to the City for a new mixed-use building with condominiums (some affordable), retail space and parking (the Affordable Housing Project). With the submission of a revised application in April 2008, the application was deemed complete for processing. In January 2009, the Berkeley Zoning Adjustments Board approved the use permit application for a five-story building with 98 residential units (including 15 affordable units); 7,770 square feet of ground floor commercial space; 114 parking spaces; and a five-foot right-of-way to the City to accommodate a new left turn lane to alleviate traffic concerns. From the beginning the Developers sought approval of a density bonus as provided under state and local law. The use permit qualified the Developers for a minimum 32.5 percent density bonus under Government Code section 65915 because, at the Developers’ option, 20.3 percent of the base units would be affordable to low-income households if built as condominiums, and 10.8 percent of the affordable units would be affordable to very-low-income households if built as rentals.

Wollmer appealed the zoning adjustments board’s decision and the City affirmed.

Prior to determining the project’s status under CEQA, the City undertook a traffic analysis, particularly focused on traffic impacts to the San Pablo/Ashby intersection. The traffic study projected that on a typical weekday, the proposed project would generate approximately 34 trips during the morning peak hour and 41 trips during the afternoon peak hour; on Saturdays, the project was expected to generate 71 trips during the peak hour. The study concluded that “all study intersections operate at LOS [(level of service)][] D or better during a.m., p.m. and Saturday peak hours, which meet City of Berkeley LOS standards.” Further, under existing and approved project conditions, “all study intersections are expected to continue operating at acceptable levels of service with minor increases in delay during the weekday. During Saturday peak hour, the intersection of San Pablo Avenue and Ashby Avenue continues to operate at LOS F, with an insignificant increase in V/C [(volume-to-capacity ratio)] due to the added project traffic.” Finally, the study also noted that the project sponsor offered to dedicate a right-of-way along the Ashby Avenue frontage which would enable the City to install a left turn lane and upgrade the signal, resulting in improved traffic flow at the intersection of San Pablo and Ashby Avenues despite additional trips generated from the project.

City planning staff considered the appropriate level of CEQA review for the project, including whether it would qualify for a “Class 32[] Categorical Exemption for ‘In-Fill Development Projects.’ ” The City determined that the Affordable Housing Project did qualify for this categorical exemption, and in May 2009 filed a notice of exemption.

B. The Senior Affordable Housing Project

Between 1990 and 2007, the population of 55 to 64 year olds in Berkeley increased 107.9 percent. To address changes in the housing market and to position the proposed development for certain funding opportunities, in May 2009, the Developers requested a modification to its use that would permit them to proceed with either the approved Affordable Housing Project, or a 98-unit mixed-use building for an affordable senior housing in-fill development (the Senior Affordable Housing Project). The proposed Senior Affordable Housing Project included 9,300 square feet of retail space, 25 parking spaces for the senior housing and 18 for retail. The residential units ranged in affordability from a 40 percent to 60 percent average median income.

The Developers also requested a revised trip generation estimate for the proposed Senior Affordable Housing Project. The transportation consultants concluded that the revised development would generate fewer trips than the already approved development, and of course like the Affordable Housing Project, it was not expected to have any significant traffic impacts.

The zoning adjustments board approved the modifications in June 2009. Wollmer appealed and the City again affirmed. Thereafter the city also determined that the proposed Senior Affordable Housing Project was exempt from CEQA on the same basis as the Affordable Housing Project. Thus, as of today, the Developers are authorized to proceed with either the Affordable Housing Project or the Senior Affordable Housing Project.

C. Litigation

Through a petition for administrative mandamus, Wollmer challenged the City approvals on several fronts, claiming violations of the City’s zoning ordinance, the state density bonus statutes and CEQA. Initially the trial court granted the petition in part, concluding that use permit condition 68, which allowed “Section 8” rent subsidies for density-bonus-qualifying units, ran afoul of section 65915. The City and the Developers objected to the statement of decision on that point. Reconsidering its earlier ruling, the trial court denied the petition in its entirety. It found that the condition was consistent with the definitions of “rents” and “affordable rent” as set forth in governing law, and was consistent with the purpose of the density bonus law. This appeal followed.

H. DISCUSSION

A. Density Bonus Law Issues

Appellant asserts that the City’s approvals violated state density bonus law in three ways: (1) condition 68 of the use permit allowed the Developers to receive Section 8 subsidies for density-bonus-qualifying units, thereby exceeding the maximum “affordable rent” established in Health and Safety Code section 50053; (2) the City’s approval of amenities should not have been considered when deciding what standards should be waived to accommodate the project; and (3) the City improperly calculated the project’s density bonus.

1. Standard of Review

A public agency’s grant of a land use permit or variance is an adjudicatory act, subject to judicial review by administrative mandamus. (Wollmer v. City of Berkeley (2009) 179 Cal.App.4th 933, 938 [102 Cal.Rptr.3d 19] (Wollmer I); Saad v. City of Berkeley (1994) 24 Cal.App.4th 1206, 1211 [30 Cal.Rptr.2d 95].) In such proceedings, the inquiry extends to “whether the respondent has proceeded without, or in excess of jurisdiction; whether there was a fair trial; and whether there was any prejudicial abuse of discretion. Abuse of discretion is established if the respondent has not proceeded in the manner required by law, the order or decision is not supported by the findings, or the findings are not supported by the evidence.” (Code Civ. Proc., § 1094.5, subd. (b); see Wollmer I, supra, 179 Cal.App.4th at p. 938.)

The trial court presumes that an agency’s decision is supported by substantial evidence; it is the petitioner’s burden to demonstrate the contrary. As well, the lower court examines the entire record and considers all relevant evidence, including evidence that detracts from the agency’s decision. Although this task involves limited weighing, it does not amount to independent review because the trial court may only overturn the agency’s decision if, based on the evidence before it, a reasonable person could not have reached the same conclusion. However, as to pure questions of law, the trial court exercises independent judgment. Finally, on appeal from the denial of a petition for administrative mandamus, we assume the same role as that of the trial court. (McAllister v. California Coastal Com. (2008) 169 Cal.App.4th 912, 921-922 [87 Cal.Rptr.3d 365]; see Hines v. California Coastal Com. (2010) 186 Cal.App.4th 830, 839-840 [112 Cal.Rptr.3d 354].)

2. Condition 68 of the Use Permit

a. Density Bonus Law and City’s Inclusionary Ordinance

The Legislature has declared that “[t]he availability of housing is of vital statewide importance . . . ,” and has determined that state and local governments have a responsibility to “make adequate provision for the housing needs of all economic segments of the community.” (§ 65580, subds. (a), (d).) Achieving the goal of providing housing affordable to low- and moderate-income households thus requires the cooperation of all levels of government. (Id., subd. (c).) The Legislature has also declared that “there exists within the urban and rural areas of the state a serious shortage of decent, safe, and sanitary housing which persons and families of low or moderate income, including the elderly and handicapped, can afford.” (Health & Saf. Code, § 50003, subd. (a).)

The state density bonus law is a powerful tool for enabling developers to include very-low-, low- and moderate-income housing units in their new developments. A “ ‘density bonus’ ” is “a density increase over the otherwise maximum allowable residential density as of the date of application by the applicant to the [municipality].” (§ 65915, subd. (f).) The purpose of this law is to encourage municipalities to offer incentives to housing developers that will “contribute significantly to the economic feasibility of lower income housing in proposed housing developments.” (§ 65917.)

Section 65915 mandates that local governments provide a density bonus when a developer agrees to construct any of the following: (1) 10 percent of total units for lower income households; (2) 5 percent of total units for very-low-income households; (3) a senior citizen housing development or mobilehome park restricted to older persons, each as defined by separate statute; or (4) 10 percent of units in a common interest development for moderate-income families or persons. (Id., subd. (b)(l)(A)-(D).) Although the details of the statute are complex, as explained in Friends of Lagoon Valley v. City of Vacaville (2007) 154 Cal.App.4th 807, 824 [65 Cal.Rptr.3d 251]: “In other words, the Density Bonus Law ‘reward[s] a developer who agrees to build a certain percentage of low-income housing with the opportunity to build more residences than would otherwise be permitted by the applicable local regulations.’ [Citation.]” To ensure compliance with section 65915, municipalities are required to adopt an ordinance establishing procedures for implementing the directives of the statute. (Id.., subds. (a), (d)(3).)

In its specifics, section 65915 establishes a progressive scale in which the density bonus percentage available to an applicant increases based on the nature of the applicant’s offer of below market rate housing. Hence, proposed projects reserving a minimum of 10 percent of total units for moderate-income households receive a. 5 percent density bonus, with every additional percentage point increase in applicable units above the minimum—up to 40 percent—receiving a 1 percent increase in the density bonus, up to a maximum 35 percent bonus. (§ 65915, subd. (f)(4).) Developers agreeing to construct a minimum of 10 percent of units for low-income households are eligible for a 20 percent density bonus, and the multiplier for each additional increase in units above the minimum amount—up to 20 percent—is 1.5 percent. (Id., subd. (f)(1).) A similar scale applies to construction of very-low-income units, except that the minimum 20 percent density bonus kicks in when only 5 percent of units are reserved for this classification, and the multiplier for each additional percent increase in units above the minimum amount—up to 11 percent—is 2.5 percent. (Id., subd. (f)(2).) Finally, for a senior housing development or age-restricted mobilehome park, the density bonus is 20 percent of the number of senior housing units. (Id., subd. (f)(3).)

Section 65915 further provides that an applicant must agree to, and the municipality must ensure, the “continued affordability of all low- and very low income units that qualified the applicant” for the density bonus, for 30 years or longer if required by certain programs, including a rental subsidy program. (Id., subd. (c)(1).) The statute goes on to state: “Rents for the lower income density bonus units shall be set at an affordable rent as defined in Section 50053 of the Health and Safety Code.” (§ 65915, subd. (c)(1), italics added.) In turn that provision establishes maximum ceilings for an “affordable rent.” As pertinent to this appeal, Health and Safety Code section 50053 states: “For any rental housing development that receives assistance on or after January 1, 1991, and a condition of that assistance is compliance with this section, ‘affordable rent,’ including a reasonable utility allowance, shall not exceed: [][]... [][] (2) For very low income households, the product of 30 percent times 50 percent of the area median income adjusted for family size appropriate for the unit.” (Id., subd. (b)(2).) However, the statute also contemplates that the Department of Housing and Community Development (Department) may, by regulation, “adopt criteria defining and providing for determination of . . . rent for purposes of this section.” (Id., § 50053, subd. (c); see id., § 50064.)

The Affordable Housing Project approved by the City includes eight units reserved for very-low-income households (10.8 percent of the base project of 74 units), entitling the Developers to a minimum density bonus of 32.5 percent. The Developers requested a 32.4 percent density bonus, which would allow 24 market rate units in addition to the 74-unit base project. For the modified Senior Affordable Housing Project, the Developers requested, and received, a 30.7 percent density bonus.

Condition 68 of the use permit approved by the City for either project details the affordability and income qualification requirements under both section 65915 and the City’s inclusionary ordinance, Berkeley Municipal Code chapter 23C.12. Under the inclusionary ordinance, 20 percent of dwelling units in a subject project must qualify as inclusionary units. (Berkeley Mun. Code, § 23C. 12.030.A.) Further, where there is more than one such unit, at least half shall be rented at a price affordable to low-income or lower income households, provided the City can make available rental subsidies through Section 8 or an equivalent program. (Id., § 23C.12.060.C.) In the case of an uneven number of inclusionary units, the majority must “be priced to be affordable to a Household at 50% of median income[] if subsidies are available. If no rental subsidies are available, all Inclusionary Unit prices shall be affordable to Households at 81% income of the Oakland PMSA median.” (Berkeley Mun. Code, § 23C.12.060.C.) In keeping with the inclusionary ordinance, condition 68 of the use permit allows Section 8 rents as the maximum housing payments for the eight very-low-income rental units qualifying for the section 65915 density bonus. We note that the Berkeley Housing Authority awarded the proposed project 87 project-based Section 8 certificates. This award allows the Developers to enter into an agreement with the Berkeley Housing Authority to construct the units, and, upon completion, for the parties to enter into a housing assistance payment contract for rental subsidies to those units. The proposed density bonus units come within the 87 project-based certificates.

b. Analysis

The cmx of appellant’s complaint is this: Condition 68 of the use permit violates the state density bonus law because it allows the Developers to receive substantially higher fair market rents available under the federal Section 8 housing program, rather than the maximum rents established under state law. Specifically, the concept of “affordable rent” means the rent that housing providers that receive density bonuses must accept as an affordable rent, not the rent at which a qualifying unit is made available to a prospective tenant. In short, appellant asserts that very-low-income units qualifying for state density bonus benefits cannot be rented for more than what Health and Safety Code section 50053, subdivision (b)(2) allows, namely 30 percent of 50 percent of area median income. Under this reasoning, the density bonus law caps the total rent a housing provider can receive from any source to the above amount, whether that rent comes from direct tenant payment or a combination of tenant contributions and a Section 8 subsidy. This is not the law.

Health and Safety Code section 50098 defines “ ‘[r]ents’ ” as “the charges paid by the persons and families of low or moderate income for occupancy in a housing development assisted under this division whether the units are rented or operated as a cooperative.” (Italics added.) As mentioned above, Health and Safety Code section 50053 also empowers the Department to promulgate regulations “defining and providing for determination of . . . rent for purposes of this section.” (Id., subd. (c).) Pursuant to this and other authority, the Department has defined the term “ ‘[a]ffordable rent,’ ” as follows: “ ‘Affordable rent’ also means rent charged as a tenant contribution under the provisions of Section 8 of the United States Housing Act of 1937, as amended, when the unit or household is receiving assistance pursuant to the Section 8 program.” (Cal. Code Regs., tit. 25, § 6922, subd. (d).)

It is apparent from all these provisions that, contrary to appellant’s assertions, “affordable rent” within the meaning of our density bonus law is concerned with the rent that a tenant pays, not with the compensation received by the housing provider. A density bonus is granted to an applicant for a housing development in exchange for the applicant’s agreement to construct a percentage of affordable housing units. (§ 65915, subd. (b)(1).) The developer’s responsibility thus is to build the agreed-upon affordable units and ensure the continued affordability of the units that qualified it for the density bonus, and that is all. (Id., subd. (c)(1).) There is no further requirement that the developer accept only up to the rent cap set out in Health and Safety Code section 50053, subdivision (b). The definition of “rent” as it applies in this context refers to the “charges paid” by the low-income tenant, not to the compensation received by the developer. (Id., § 50098.) Where there is assistance under the Section 8 program, “affordable rent” refers to the tenant’s contribution, not to any subsidy in the hands of the developer. (Cal. Code Regs., tit. 25, § 6922, subd. (d).) And it goes without saying that the concept of affordability pertains to the tenant, not the developer. The rents for density bonus units must “be set at an affordable rent” so that the prospective lower income tenants can obtain and pay for housing. (§ 65915, subd. (c)(1).) It would be nonsensical to equate the notion of setting of “an affordable rent” with that of setting and capping the developer’s compensation.

Why does any of this matter to Wollmer? He posits that “at its core” the density bonus law is “a scheme of steeply progressive levels of benefits intended to offset some or all of the ‘cost’ of supplying deeper affordability.” According to Wollmer, the statutory scheme is “undermined” if an applicant is allowed to capture the difference between Section 8 rents and the maximum rent for very-low-income-qualifying units under Health and Safety Code section 50053. Further, condition 68 of the use permit “fail[s] to impose the corresponding ‘cost’ of supplying very low income units to the Project.”

We start with the purpose of the density bonus law, namely that the density bonus and other incentives offered by a municipality will “contribute significantly to the economic feasibility of lower income housing in proposed housing developments.” (§ 65917.) The progressive level of benefits for deeper affordability is the mechanism by which municipalities entice developers to build low-income housing. The Section 8 housing program in turn is designed to deliver safe, sanitary and decent housing to low-income families. (Bakos v. Flint Housing Com. (6th Cir. 1984) 746 F.2d 1179, 1180.) That the City, through its inclusionary ordinance, requires the use of Section 8 rents if available for certain inclusionary units, enhances, rather than detracts from, the goal of “contributing] significantly to the economic feasibility of lower income housing . . . .” (§ 65917.)

The inclusionaiy ordinance encourages use of the Section 8 program as a way of accomplishing deeper affordability (i.e., to households at 50 percent of median income) in development of inclusionary units in new housing projects. By allowing a developer the additional incentive of a Section 8 subsidy above the low-income tenant’s contributions thus “contribute^] significantly to the economic feasibility of lower income housing in proposed housing developments.” (§ 65917.) On the other hand, imposing “costs” on a developer attempting to build affordable units is hostile to the letter and spirit of the density bonus law. (See Friends of Lagoon Valley v. City of Vacaville, supra, 154 Cal.App.4th at p. 826.) To conclude, section 65917 does not display any legislative intent to make developers choose between regulatory incentives and rental subsidies.

We note finally that federal law requires that 40 percent of all project-based Section 8 subsidies be provided to families with incomes at or below 30 percent of the area median income, which equates to extremely low-income households under Health and Safety Code section 50053, subdivision (b)(1). Thus, the intersecting of the Section 8 program with the density bonus law results in development of more units provided to the most vulnerable population.

3. Calculation of the Project’s Density Bonus

Wollmer also attacks the City’s method of calculating a project’s density bonus. He maintains that in deriving the number of density bonus units permitted under section 65915, the City wrongly applied the allowable density under its zoning ordinance rather than that set forth in the land use element of the general plan. The end result, he claims, is an inflated and illegal density bonus. According to Wollmer, the density allowed under the zoning ordinance is three times that allowed under the land use element. There is nothing wrong with the City’s approach to calculating a project’s density bonus.

Some background is in order. The density increase allowed under the density bonus law is an increase “over the otherwise maximum allowable residential density . . . .” (§ 65915, subd. (f).) “ ‘Maximum allowable residential density’ ” in turn means “the density allowed under the zoning ordinance and land use element of the general plan, or if a range of density is permitted, means the maximum allowable density for the specific zoning range and land use element of the general plan applicable to the project. Where the density allowed under the zoning ordinance is inconsistent with the density allowed under the land use element of the general plan, the general plan density shall prevail.” (Id., subd. (