SARAH ANDERSON et al., Plaintiffs and Appellants, v. CITY OF SAN JOSE et al., Defendants and Respondents.
H045271
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SIXTH APPELLATE DISTRICT
Filed 11/26/19
Santa Clara County Super. Ct. No. 16CV297950
CERTIFIED FOR PUBLICATION
The dispute centers on the City of San Jose‘s passage of City Policy 7-13 (Policy 7-13), which appellants Sarah Anderson, Joana Cruz, Urban Habitat Program, and Housing California contend violates the Surplus Land Act (
The trial court answered this question affirmatively. It ruled that in regulating how local government disposes of surplus property for the benefit of its residents, the Surplus Land Act addresses a decidedly municipal affair, not a statewide concern, and under the state Constitution does not preempt the City‘s policy. The trial court therefore sustained without leave to amend the City‘s demurrer to the relevant causes of action.
We will reverse. The Surplus Land Act advances state land use policy objectives by mandating a uniform approach to the disposition of local government land that is no longer needed for government use. By requiring municipalities to prioritize surplus land for the development of low- and moderate-income housing, the statute addresses the shortage of sites available for affordable housing development as a matter of statewide concern. Because the statute also narrowly tailors the restrictions on local government to avoid unnecessary interference in the locality‘s affairs, it meets the test for statewide preemption. We conclude that while a city‘s process for disposing of surplus city-owned land is typically a municipal affair, San Jose‘s policy here must yield to the state law.
I. BACKGROUND
Anderson and Cruz are two low-income individuals who rent housing in San Jose. Both live with their families in crowded conditions and struggle to afford rent, paying 50 percent or more of their income toward housing costs. Anderson and her two minor children are a very low-income household according to the Department of Housing and Urban Development‘s (HUD) definition, earning less than 50 percent of the area median income. Cruz, her husband, two minor children, and brother-in-law are an extremely low-income household according to HUD, earning less than 30 percent of the area
San Jose is a charter city and municipal corporation formed under the laws of the State of California and governed by the city charter, enacted in 1965. San Jose has taken various measures to expand affordable housing availability for its residents. It imposes a housing impact fee of $17 per square foot on most newly constructed residential rental properties to support funding for affordable housing supply. It also requires at least 15 percent of for-sale units in new residential development projects of 20 or more units to be set aside for sale at prices affordable to low- or moderate-income households. This feature is part of San Jose‘s inclusionary housing ordinance, which the City successfully defended in a legal challenge that was considered by the California Supreme Court in California Building Industry Assn. v. City of San Jose (2015) 61 Cal.4th 435 (California Building).
San Jose also has established procedures for the sale of city-owned property. In April 2016, city staff recommended that the city council update the City‘s procedures for the sale of surplus property to reflect changes to the Surplus Land Act (the Act) (
The Act declares “that housing is of vital statewide importance to the health, safety, and welfare of the residents of this state and that provision of a decent home and a suitable living environment for every Californian is a priority of the highest order.” (
The City responded to its staff recommendations by adopting Policy 7-13, titled a “Policy for the Sale of Surplus Property With Provisions Relating to Affordable Housing.” The stated purpose of Policy 7-13 is to “strengthen[] the ability for affordable housing developers to acquire surplus land” and to reinforce the “importance of promoting affordable housing within the City in addition to open space, and the development of educational institutions.”
In adopting Policy 7-13, the city council committed to “generally follow” the amended Act as a means of promoting affordable housing within the City. It noted that the state law can serve “as an additional tool to support the development of affordable housing that is important for addressing the housing crisis in the area.” The council at the same time observed that the 2014 amendments to the Act “may impact the value of real property to be sold by the City and . . . impede the City‘s power to determine the future use of parcels to be sold . . . .” In light of these concerns, the city council asserted that as a charter city San Jose had “plenary power over its municipal affairs” and was “not required to follow the . . . modified provisions of Government Code Sections 54220 et seq., pertaining to the sale of surplus real property by a local agency . . . .”
The City‘s updated policy, Policy 7-13, consequently departed from the Act in several key areas. Among these, it created a five-year exemption from affordable housing restrictions for high-rise rental developments in the downtown. It allowed City staff to request and obtain city council approval in specific cases for a property to be sold for use other than affordable housing, or for the City manager to modify the process for disposing of surplus property “‘to accommodate circumstances applicable to significant or unusual properties.‘” It expanded the income range for those eligible for affordable for-sale units, enabling developers to sell at a higher sales price to moderate-income households. And it omitted the requirement that certain affordable housing restrictions be recorded in a covenant at the time the surplus land is sold.
II. PROCEDURAL HISTORY
Anderson, Cruz, Urban Habitat Program, and Housing California (together appellants) filed a verified petition for writ of mandate and complaint for declaratory and injunctive relief (petition) against the City shortly after the adoption of Policy 7-13.
The City demurred to all causes of action. It contended that it was exempt from the Act under the home rule doctrine because the power to sell city property and determine how the property should be used falls within the City‘s exercise of authority over its own municipal affairs. Appellants responded that under the four-part test articulated in California Fed. Savings & Loan Assn. v. City of Los Angeles (1991) 54 Cal.3d 1 (California Fed. Savings) and confirmed in State Building & Construction Trades Council of California v. City of Vista (2012) 54 Cal.4th 547, 556 (City of Vista), the Act preempted contrary city policy. They identified the “shortage of affordable housing for lower-income households” as the subject of the Act for purposes of the trial court‘s inquiry under City of Vista. The City, however, argued that the appropriate inquiry was not about the state‘s interest in affordable housing but “about whether the state can try to further that interest by interfering in the City‘s sale of its own property . . . .”
In a written decision after oral argument, the trial court sustained the demurrer to the first and second causes of action without leave to amend.4 The trial court rejected appellants’ identification of the relevant subject matter, finding “the issue here is not an abstract concern regarding the shortage of affordable housing for low-income individuals, but rather [whether] the state can require a charter city to sell its own land in a particular way that supports providing affordable housing for low-income families.” The court further distinguished the matter from other cases finding affordable housing to be a matter of statewide concern. In reference to Buena Vista Gardens Apartments Assn. v. City of San Diego Planning Dept. (1985) 175 Cal.App.3d 289, 307 (Buena Vista)—in which the appellate court rejected as “meritless” the contention that the home rule doctrine limited the Legislature from compelling charter cities, through the
Appellants moved for reconsideration of the trial court‘s demurrer order pursuant to
housing crisis and related consequences for the state‘s economy and public health, the need for local government participation in freeing land for affordable housing development, and the role of charter cities like San Jose, which account for nearly half of California‘s population.
The City opposed reconsideration, arguing that the proposed amended petition merely sought to bolster an argument that the trial court had rejected. The trial court denied the motion for reconsideration, finding that appellants had failed to explain why the newly alleged facts were unavailable at the time the demurrer was filed.
Appellants filed a request to dismiss without prejudice the remaining causes of action, obtained final entry of judgment, and pursued this appeal.
II. DISCUSSION
We determine whether the sale of surplus, city-owned land for affordable housing development falls within San Jose‘s home rule authority by applying the analytical framework set forth in California Fed. Savings and described in detail below. Our inquiry “turns ultimately on the meaning and scope of the state law in question and the relevant state constitutional provisions.” (City of Vista, supra, 54 Cal.4th at p. 558.) City of Vista confirmed that this presents a legal question, not a factual one. (Ibid.) Accordingly, we exercise our independent judgment in interpreting the state law to decide whether it can be constitutionally applied to charter cities. (Ibid.) So too, we review de novo the trial court‘s order sustaining the City‘s demurrer without leave to amend to decide whether the proposed amended
139 Cal.App.4th 629, 648.) In doing so, we assume the properly pleaded material allegations of the petition are true and give the complaint a reasonable interpretation by reading it as a whole and all its parts in their context. (Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125 (Moore).)
A. Analytical Framework: California‘s Home Rule Doctrine
What is known as “home rule” thus “represents an ‘affirmative constitutional grant to charter cities of “all powers appropriate for a municipality to possess . . .” and [includes] the important corollary that “so far as ‘municipal affairs’ are concerned,” charter cities are “supreme and beyond the reach of legislative enactment.” ’ ” (City of Vista, supra, 54 Cal.4th at p. 556, quoting California Fed. Savings, supra, 54 Cal.3d at p. 12.) The home rule doctrine enshrines charter cities’ sovereignty over “municipal affairs.” (
affairs].” (California Fed. Savings, supra, at p. 13.) This “countervailing dimension” of the home rule doctrine led the court in California Fed. Savings to “reject a static and compartmentalized description of ‘municipal affairs’ in favor of a more dialectical one.” (Ibid.) There
The resulting analytical framework steps the reviewing court through four criteria, ultimately forcing a choice “between conflicting state and municipal enactments when both stem from concerns rooted in their respective spheres of government.” (California Fed. Savings, supra, 54 Cal.3d at p. 13.) As applied by the California Supreme Court in City of Vista, the framework comprises four parts. “First, a court must determine whether the city ordinance at issue regulates an activity that can be characterized as a ‘municipal affair.’ [Citation.] Second, the court ‘must satisfy itself that the case presents an actual conflict between [local and state law].’ [Citation.] Third, the court must decide whether the state law addresses a matter of ‘statewide concern.’ [Citation.] Finally, the court must determine whether the law is ‘reasonably related to . . . resolution’ of that concern [citation] and ‘narrowly tailored’ to avoid unnecessary interference in local governance.” (City of Vista, supra, 54 Cal.4th at p. 556, quoting California Fed. Savings, supra, at pp. 16-17, 24.)
Among these criteria, “the question of statewide concern is the bedrock inquiry through which the conflict between state and local interests is adjusted. If the subject of the statute fails to qualify as one of statewide concern, then the conflicting charter city measure is a ‘municipal affair’ and ‘beyond the reach of legislative enactment.‘. . . If, however, the court is persuaded that the subject of the state statute is one of statewide concern and that the statute is reasonably related to its resolution, then the conflicting charter city measure ceases to be a ‘municipal affair’ pro tanto and the Legislature is not
prohibited by
B. Application of the California Fed. Savings Analytical Framework
There is no dispute that the first two elements of the California Fed. Savings test are met in this case. We briefly confirm the application of these criteria before addressing the question of whether the disposal of locally owned surplus property for affordable housing purposes is a matter of statewide concern. If so, we consider whether the provisions of the Act are reasonably related to resolution of that concern and narrowly tailored to avoid unnecessary interference in local governance.
There is no “defining formulation” of the phrase ” ‘municipal affairs’ ” within the meaning of the home rule provision of the state Constitution. (California Fed. Savings, supra, 54 Cal.3d at p. 6.) Although
In City of Vista, the court deemed it apparent that “the construction of a city-operated facility for the benefit of a city‘s inhabitants is quintessentially a municipal affair, as is the control over the expenditure of a city‘s own funds.” (City of Vista, supra, 54 Cal.4th at p. 559.) The City contends that the disposal of surplus city-owned land for the benefit of its residents presents a similar example of local control over local assets. Indeed, it is within the City‘s authority to “purchase, lease, receive, hold, and enjoy real and personal property, and control and dispose of it for the common benefit.” (
legitimate interest in how it disposes of property no longer needed for government use and do not contest that San Jose‘s regulation of the sale of surplus city-owned land constitutes a ” ‘municipal affair’ ” under the analytical framework.
Both parties also recognize the ” ‘actual conflict’ ” between state law and the local policy. (City of Vista, supra, 54 Cal.4th at p. 556.) The Act expressly applies to charter cities. It directs “[a]ny local agency disposing of surplus land . . .” to comply with its provisions (
Policy 7-13 diverges from the Act in a few ways. Paragraph (B)(3) of Policy 7-13 states, for example, that for surplus land sold to a preferred entity to develop low- or moderate-income housing, no less than 25 percent of for-sale units must be made available at affordable prices for rental for lower-income households or for sale to moderate-income households for at least 55 years. The provision conflicts with
A similar schism affects the provisions pertaining to surplus land that is sold or leased on the open market rather than to a public entity for affordable housing development, which is then used to develop 10 or more units of residential housing. Policy 7-13, paragraph (C)(2) in that case requires that no less than 15 percent of units be sold at affordable cost for households earning up to 120 percent of area median income,
targeting a higher-income bracket than the statute, which requires not less than 15 percent of the units to be sold at affordable housing cost to lower-income households (
The City‘s policy also exempts certain projects from its affordability restrictions and, by extension, from those of the Act. For example, Policy 7-13, paragraph (D)(2) exempts “high-rise rental development in the downtown” from affordable restrictions if the developer obtains necessary planning approvals and building permits before July 2021. And Policy 7-13, paragraph (D)(4) authorizes city staff to “request an exemption from this policy to meet another City goal and prioritize the sale of the surplus property for parks, schools, or other reasons, such as economic development.” The exemption requires city council approval and written notice to those entities that, under the statute, would be notified of an offer to sell or lease of the surplus property.
We find these differences demonstrate an “actual conflict” between the Act and the City‘s surplus land policy under California Fed. Savings.
2. The Surplus Land Act Addresses a Matter of Statewide Concern
We arrive at the contested issue of statewide concern. It is a tricky question that hinges on “how the state Constitution allocates governmental authority between charter cities and the state.” (City of Vista, supra, 54 Cal.4th at p. 557.) We are mindful of the California Supreme Court‘s further guidance on this point.
The phrase “statewide concern,” according to California Fed. Savings, is “nothing more than a conceptual formula employed in aid of the judicial mediation of jurisdictional disputes between charter cities and the Legislature, one that facially discloses a focus on extramunicipal concerns as the starting point for analysis.” (California Fed. Savings, supra, 54 Cal.3d at p. 17.) Like its ” ‘municipal affairs’ ” counterpart, it is not subject to factual certainty; both phrases represent “ultimate legal conclusions” (ibid.) that require courts to ” ‘allocate the governmental powers under
consideration in the most sensible and appropriate fashion as between local and state legislative bodies.’ ” (Ibid.) Moreover, neither is mutually exclusive: a court‘s invalidation of a charter city measure in favor of a conflicting state statute “does not necessarily rest on the conclusion that the subject matter of the former is not appropriate for municipal regulation. It means, rather, that under the historical circumstances presented, the state has a more substantial interest in the subject than the charter city.” (Id. at p. 18, italics added.)
Our high court in City of Vista, supra, 54 Cal.4th at page 557, interpreted its task under this rubric as one that considers the “historical, and hence factual, realities” informing the legislation at issue but that “turns ultimately on the meaning and scope of the state law in question . . .” (id. at p. 558). It explained that while courts “accord great weight to the factual record” compiled by the Legislature or established in trial court proceedings, those factual findings “are not controlling.” (Ibid.) Because both parties in this case claim to derive support from the application of these principles in City of Vista, we review the court‘s findings and rationale in some detail.
b. City of Vista‘s Approach to Analyzing “Statewide Concern”
In City of Vista, a labor union challenged a charter city measure proclaiming that the city would not comply with the state prevailing wage law on its public works contracts. (City of Vista, supra, 54 Cal.4th at pp. 552-553.) The prevailing wage law required government contractors on public works projects to pay workers a prevailing daily wage as determined by the Department of Industrial Relations for the locality and type of work. (Id. at pp. 552, 555.) The union argued that state law preempted the local measure, citing statutory and economic changes that had shifted construction wages and the related training of skilled workers from a localized to a regional matter and had elevated wage levels on public works to an issue of statewide concern. (Id. at pp. 561-562.)
In drawing this conclusion, the California Supreme Court emphasized that “[a]utonomy with regard to the expenditure of public funds lies at the heart of what it means to be an independent governmental entity.” (City of Vista, supra, 54 Cal.4th at p. 562.) It was not enough for the union to “justify state regulation of the spending practices of charter cities merely by identifying some indirect effect on the regional and state economies.” (Ibid.) The court deemed this outcome consistent with previous decisions finding that compensation of charter city employees—or those of similarly independent governmental entities—was not a statewide concern. (Id. at pp. 562-564.)
The California Supreme Court also distinguished those aspects of the prevailing wage law that it found inconsistent with statewide preemption. It suggested that laws setting forth “generally applicable procedural standards” (City of Vista, supra, 54 Cal.4th at p. 564) were more likely to address a statewide concern and “impinged less on local autonomy than if they had imposed substantive obligations” (ibid.). But the prevailing wage law was not among those broader laws, given its “narrower application . . . to the
public works projects of public agencies” (ibid.) and its imposition of “substantive obligations on charter cities” (id. at p. 565) by setting wages.
Finally, the California Supreme Court reiterated that legislative declarations of statewide concern are not determinative. Although the court assigns such statements “great weight,” “the resolution of constitutional challenges to state laws falls within the judicial power, not the legislative power.” (City of Vista, supra, 54 Cal.4th at p. 565Ibid.) It concluded that “no statewide concern has been presented justifying the state‘s regulation of the wages that charter cities require their contractors to pay to workers hired to construct locally funded public works.” (Id. at p. 566.)
c. The Shortage of Sites Available for Affordable Housing Development Is a Matter of Statewide Concern
Appellants, supported by amici curiae California Department of Housing and Community Development and Alliance of Californians for Community Empowerment, contend that this case yields the opposite result as City of Vista due to the presence of a statewide concern. Appellants claim that the Act patently addresses the “shortage of sites available for housing for persons and families of low and moderate income . . . .” (
The City, supported by amicus curiae League of California Cities, responds that the trial court correctly patterned its analysis after City of Vista. It submits that the well-documented need for increased availability of affordable housing statewide does not meet the test for state interference in the City‘s management of city-owned resources to
accomplish housing and other goals tailored to city residents. The City compares the state‘s general interest in affordable housing to what the court in City of Vista found was an “abstract interest in labor conditions and vocational training.” (City of Vista, supra, 54 Cal.4th at p. 561.) Since such a broad general interest does not amount to statewide concern under City of Vista, the City contends that the trial court correctly ruled that the “shortage of affordable housing for lower-income households” addressed in the Act does not constitute a matter of statewide concern.
The City also urges this court to reject what it suggests is appellants’ effort to re-formulate the purported identification of “statewide concern” on appeal.7 But because we exercise our independent judgment in interpreting the state law to identify whether it addresses a matter of statewide concern and can be
Turning to the merits, we find that the trial court misapprehended the nature of the statewide concern that underlies the Act and overlooked the relationship to California‘s housing crisis as documented in both legislative enactments and judicial decisions.
The Act advances state land use policy objectives by mandating a uniform approach to the disposition of land that local public agencies, including charter cities, no longer need. (
(
The Act‘s affordable housing objective reflects the Legislature‘s dual declaration that (1) the provision of suitable housing for Californians “is a priority of the highest order” (
These policy priorities evolved with the unfolding of the state‘s housing crisis, as may be seen in amendments to the Act, which was first enacted in 1968 to address “an identifiable deficiency in the amount of recreational land available to the public.” (Stats. 1968, ch. 621, p. 1307, § 1.) In 1979, the Legislature added “low and moderate income housing” to the objectives of the statute. (Stats. 1979, ch. 942, §§ 1-6, pp. 3246-3247.) In 1982, the Legislature revised the statute‘s procedural requirements to explicitly prioritize affordable housing and further specified the “vital statewide importance” of housing and “shortage of sites available” for low- and moderate-income housing. (Stats. 1982, ch. 1442, §§ 1.5, 3, 4, 6, 9, pp. 5507-5509.) Again in
households. (See
In its current form, the Act requires the local agency disposing of surplus land to send an offer to sell or lease the property for development of low- and moderate-income housing to certain public entities and “housing sponsors” within the jurisdiction. (
We make two observations about the statute. First, the statutory language is unambiguous. It identifies the “shortage of sites available for” low- and moderate-income housing in California as its subject (
Of course, the Legislature‘s characterization of statewide concern is not determinative, as the City here points out. (City of Vista, supra, 54 Cal.4th at p. 565.) Courts “may not simply abdicate to the Legislature” (County of Riverside v. Superior Court (2003) 30 Cal.4th 278, 286 (County of Riverside)) the determination of statewide concern and the corresponding assignment of power between local and state government (ibid.).
But neither may the trial court disregard the Legislature‘s pronouncements about the importance of the concern to the state or the supporting factual and decisional record, as appears to have occurred here. The standard is one of “defer[ence] to legislative estimates regarding the significance of a given problem and the responsive measures that should be taken toward its resolution.” (California Fed. Savings, supra, 54 Cal.3d at
p. 24; accord City of Vista, supra, 54 Cal.4th at p. 558 [“Courts accord great weight to the factual record that the Legislature has compiled“].) The basis for deferring to the legislative evaluation of a problem is that ” ‘the factors which influenced the Legislature to adopt the general laws may likewise lead the courts to the conclusion that the matter is of statewide rather than merely local concern.’ ” (County of Riverside, supra, 30 Cal.4th at pp. 286-287.)
In California Fed. Savings, the court explored the historical and regulatory record affecting the subject of the legislation at issue, which concerned state taxation of financial corporations. (California Fed. Savings, supra, 54 Cal.3d at pp. 8-10, 21-23.) In considering whether the City of Los Angeles could maintain an annual license tax on businesses within its jurisdiction—including those financial corporations covered by state law (id. at p. 11), the court followed the legislative and economic developments that underlay the state‘s expansion of the single state income tax to financial corporations (id. at pp. 19-20). It concluded, based on the historical and regulatory context, that the aggregate tax scheme of Los Angeles and other municipalities had “acquired a regulatory dimension they might not possess under different economic and competitive conditions” (id. at p. 23) and that “the income tax burden on financial corporations . . . including
The California Supreme Court in City of Vista similarly considered the historical and economic context presented by the union for the prevailing wage law but found the connection to the asserted statewide interest too remote to overcome the charter city‘s municipal authority over contract wages. (City of Vista, supra, 54 Cal.4th at pp. 561-562; cf. id. at p. 571 (dis. opn. of Werdegar, J.) [finding majority improperly disregarded “prevailing wage law‘s far-reaching economic impact” on state‘s economy].) The court also weighed the degree to which the law impinged on autonomous municipal function. (City of Vista, supra, at p. 564.) To make that determination, the majority cited an earlier
decision on public employee compensation which “drew an important distinction between state procedural laws governing the affairs of local governmental entities (which by their nature impinge less on local affairs) and state laws dictating the substance of a public employee labor issue (which impinge much more on local affairs).” (Id. at pp. 563-564, citing County of Riverside, supra, 30 Cal.4th at p. 289.)
We believe that City of Vista does not dictate an equivalent result in this case because regulation of the disposal of surplus municipal land by the Act is not so attenuated as to have only an “indirect effect” (City of Vista, supra, 54 Cal.4th at p. 562) on the shortage of sites available for affordable housing development. As in California Fed. Savings, there is a robust legislative and historical context to support the state‘s interest in ensuring that local government prioritizes available surplus land for affordable housing. We briefly review this legislative and historical context to better consider the statewide concern and tension with the City‘s interests.
California‘s state housing goal is “[t]o provide a decent home and suitable living environment for every California family . . . .” (
This statutory language is from the late 1970‘s, but our Supreme Court recently observed that “[i]t will come as no surprise to anyone familiar with California‘s current housing market that the significant problems arising from
Against this backdrop, the California Supreme Court in California Building examined legislative efforts to facilitate the provision of affordable housing. (California Building, supra, 61 Cal.4th. at pp. 444-445.) Primary among them is the comprehensive statutory scheme enacted in 1980 to “substantially strengthen[] the requirements of the housing element component of local general plans” known as the “Housing Element Law” (
The specific legal questions addressed in California Building and the intricacies of the Housing Element Law are not pertinent here;10 we reference them solely to gain insight into the “statewide dimension” (California Fed. Savings, supra, 54 Cal.3d at p. 18) that might justify superseding state legislation in our case. In this regard, it is telling that within the past five years, our Supreme Court has pronounced the “problems arising from a scarcity of affordable housing” (California Building, supra, 61 Cal.4th. at p. 441) to be “more severe” (ibid.) than in the past. It is also noteworthy that the court‘s observation is hardly unprecedented.
Judicial decisions predating California Building have recognized the statewide dimension of the affordable housing shortage in relation to various impositions by the state into the realm of local affairs. (See Green v. Superior Court (1974) 10 Cal.3d 616, 625 [citing
Recent legislative efforts to address these challenges appear to reinforce the California Supreme Court‘s assessment in California Building. These include the 2014 amendments to the Act discussed above. In a seemingly coordinated fashion, changes to the Housing Element Law have increased state oversight and enforcement authority related to regional housing needs allocation plans that further objectives like increasing housing supply in an equitable manner and promoting an improved intraregional relationship between jobs and housing. (
As noted earlier, the amendments to the Act hone the legislative findings to identify a shortage of available low- and moderate-income housing sites as “a barrier to addressing urgent statewide housing needs” and state “that surplus government land, prior to disposition, should be made available for that purpose.” (Assem. Bill No. 1486, Stats. 2019, ch. 664, § 1 (eff. Jan. 1, 2020) [amending
The mandate for localities to assess affordable housing needs regionally and to include the disposition of surplus government land in that assessment is consistent with the state housing goal, which recognizes that the shortage of supply “creates inflation in the cost of housing, by reason of its scarcity, which tends to decrease the relative affordability of the state‘s housing supply for all its residents.” (
The information summarized above supports appellants’ contention that the “shortage of sites available for housing for persons and families of low and moderate income” (
Accordingly, we find that as much as the City has a readily identifiable interest in the disposition of its real property, the well-documented shortage of sites for low- and moderate-income housing and the regional spillover effects of insufficient housing demonstrate “extramunicipal concerns” justifying statewide application of the Act‘s affordable housing priorities. (California Fed. Savings, supra, 54 Cal.3d at p. 18.)
We also believe that it treads within the boundary indicated by City of Vista for assessing statewide concern based on the degree to which the law impinges on local governing rights. (City of Vista, supra, 54 Cal.4th at p. 564.) “[A] state law of broad general application is more likely to address a statewide concern than one that is narrow and particularized in its application.” (Ibid.) In City of Vista, the court viewed the prevailing wage law as having narrow application “only to the public works projects of public agencies” in contrast with a minimum wage law of broad application. (Ibid.) The prevailing wage law also imposed “substantive obligations on charter cities, not merely generally applicable procedural standards” (id. at p. 565), which “further undermine[d]” the assertion that the matter presented a statewide concern (ibid.).
Here, appellants contend that the Act is predominantly procedural in nature and grants local government significant control over land disposition choices, even with respect to provisions of the law that might be characterized as substantive. The City disagrees. It contends that, like the prevailing wage law in City of Vista, the Act dictates how local government manages its own real property. The City avers that while earlier versions of the Act required only procedural compliance with notice to public entities about available surplus land, the statute now prescribes affordable housing over other uses and dictates specific affordability requirements, including units to be set aside, income ranges, and deed restrictions. (See
We find that the Act has a broad reach, applying to “[a]ny” local government entity empowered to acquire and hold real property, including cities—both charter cities and those organized under general law, counties, and districts. (
We also find that the Act is neither entirely procedural nor substantive in effect. First, it mandates a process for notice and negotiations with preferred entities before a local agency can offer the property more widely. (
We conclude from these provisions that the substantive measures are significant in their narrow spheres but do not dominate the generally applicable procedural standards. Nor does the Act‘s potential constraint on a charter city‘s ability to negotiate an optimal deal or to set a minimum floor for affordability in a surplus land conveyance necessarily preclude a finding of statewide concern. ” ‘[G]eneral laws seeking to accomplish an objective of statewide concern’ . . . ‘may prevail over conflicting local regulations even if they impinge to a limited extent upon some phase of local control.’ ” ( County of Riverside, supra, 30 Cal.4th at p. 287.) The threshold in County of Riverside, in which the California Supreme Court upheld a county‘s authority to disregard a state statutory requirement that counties submit to binding arbitration of economic issues arising in union negotiations, was the locality‘s decisionmaking autonomy. The court explained that “regulating labor relations is one thing; depriving the county entirely of its authority to set employee salaries is quite another.” (Id. at p. 288.)
In our case, the substantive measures do not “entirely” deprive the City of important discretion in deciding how and whether to dispose of a surplus parcel for affordable housing or residential development purposes. (Cf. County of Riverside, supra, 30 Cal.4th at p. 288.) As appellants point out, courts have upheld state regulation of municipal affairs on numerous occasions after identifying a countervailing statewide concern. (See, e.g., California Fed. Savings, supra, 54 Cal.3d at pp. 24-25 [statewide concerns related to financial market regulation were sufficient to justify elimination of local taxes on savings banks]; City of Los Angeles v. Department of Health (1976) 63 Cal.App.3d 473, 476, 479-480 [statewide concern that handicapped persons not be excluded from residential communities justified preemption of local zoning regulation concerning group homes for the disabled]; Lippman v. City of Oakland (2017) 19 Cal.App.5th 750, 764-765, 767 [state interest in fair resolution of building code violation appeals affecting property owners justified imposition of state-mandated appeal process on charter city]; Jauregui v. City of Palmdale (2014) 226 Cal.App.4th 781, 799-801 [statewide interest in preventing race-based voter dilution overcame charter city‘s right to structure council elections using an at-large system].)
We are not persuaded by the City‘s effort to distinguish these and other cases by emphasizing that the statutes at issue imposed no substantive requirements on local government. As in our case, substance and procedure are not always dichotomous. For example, the conduct of citywide elections at issue in Jauregui v. City of Palmdale, supra, 226 Cal.App.4th 781, may be framed as procedural, but the court‘s order to enjoin certification of at-large city council election results based on application of the state‘s voting rights statute was unquestionably substantive. (Id. at pp. 799-801, 804.)
Other cases relied upon by the parties merely illustrate that it can be difficult to ascertain to what extent, if at all, the Act more severely impinges upon local sovereignty than the statutes in those cases. In Buena Vista, supra, 175 Cal.App.3d 289, the Housing Element Law required the city to adopt a five-year schedule of actions to achieve the housing element goals (
The laws in these cases constrained but did not eliminate local discretion, such as that over the form of housing desired for an area in Bruce and City of Santa Monica, or the need to commit to concrete actions under the housing element in Buena Vista. Similarly, the Act in this case imposes minimum requirements for affordable housing development on surplus land (
A recent appellate case aptly summarized the balance of considerations when the law in question substantively regulates a municipal interest. Marquez v. City of Long Beach (2019) 32 Cal.App.5th 552, 556 (Marquez) involved a charter city‘s alleged failure to comply with the statewide minimum wage. The court evaluated the city‘s claim to home rule authority over its municipal affairs—including its ” ‘plenary authority’ [citation] to provide for the compensation of city employees” as set forth in the state Constitution. (Id. at p. 567.) The Marquez court acknowledged that the minimum wage requirements “are substantive regulations that directly implicate municipal interests in compensation of their employees.” (Id. at p. 573Ibid.) At the same time, the court reasoned that “the distinction between substantive and procedural measures is not determinative, and substantive laws displacing local authority over municipal affairs have been upheld by the courts.” (Ibid.)
Marquez differentiated the substantive nature of minimum wage regulations from that of the prevailing wage law addressed in City of Vista. (Marquez, supra, 32 Cal.App.5th at p. 574Ibid.) In this way “the impact of the minimum wage law is consistent with the Supreme Court‘s conclusion [that] ‘the Legislature may regulate as to matters of statewide concern even if the regulation impinges “to a limited extent” ’ on local control of municipal affairs.” (Ibid., quoting County of Riverside, supra, 30 Cal.4th at p. 287.)
We agree with the court‘s assessment in Marquez. As applied here, the substantive measures of the Act set a floor, which limits a charter city‘s ability to reduce the percentage of units designated for sale or lease at the specified affordability levels when surplus land is sold or leased for residential housing purposes. (
We conclude that the Act‘s prioritization of surplus city-owned land for affordable housing purposes “demonstrably transcend[s] identifiable municipal interests” (California Fed. Savings, supra, 54 Cal.3d at p. 17) and, under current circumstances, demonstrates that “the state has a more substantial interest in the subject than the charter city” (id. at p. 18). Framed more narrowly in accordance with City of Vista, we find that the state can require a charter city to prioritize surplus city-owned land for affordable housing development and subject a charter city to restrictions in the manner of disposal of that land, because the shortage of sites available for affordable housing development is a matter of statewide concern. (See City of Vista, supra, 54 Cal.4th at pp. 561-562; California Fed. Savings, supra, 54 Cal.3d at p. 18.)
3. The Surplus Land Act Is Sufficiently Tailored to its Purpose
The fourth and final part of our inquiry is two pronged. We must decide whether the state statute is ” ‘reasonably related to . . . resolution’ ” of the identified statewide concern (City of Vista, supra, 54 Cal.4th at p. 556) and is ” ‘narrowly tailored’ to avoid unnecessary interference in local governance” (ibid.). (Accord, California Fed. Savings, supra, 54 Cal.3d at pp. 17, 24.) At this step the court considers ” ‘the sweep of the state‘s protective measures [which] may be no broader than its interest.’ ” (Id. at p. 25.) Put another way, “the state law must be reasonably related to the issue at hand and limit the incursion into a city‘s municipal interest.” (Lippman v. City of Oakland, supra, 19 Cal.App.5th at p. 765.)
We have already assessed the sweep of the statute and extent of the incursion into the City‘s local affairs. The Act applies broadly to local government entities empowered to hold real property but is tailored in subject: it addresses only surplus land held by a local government entity, defined as land “that is determined to be no longer necessary for the agency‘s use, except property being held by the agency for the purpose of exchange.” (
The Act‘s most general prescription, requiring the agency to give written notice to certain public entities or housing sponsors of the offer to sell or lease the property for the purpose of developing low- and moderate-income housing (
These measures also are reasonably related to the statewide concern articulated in the Act. Here, the “state‘s protective measures” (California Fed. Savings, supra, 54 Cal.3d at p. 25) require local government agencies to prioritize available surplus land for affordable housing development (
In brief, we find that (1) the disposal of surplus city-owned land for the benefit of city residents is a municipal affair, (2) there is an actual conflict between the Surplus Land Act and the City of San Jose‘s Policy 7-13, (3) the shortage of sites available for affordable housing development is a matter of statewide concern, and (4) prioritizing surplus city-owned land for affordable housing purposes as required by the Act is reasonably related to the statewide concern and provides a narrowly tailored solution that does not unnecessarily interfere in local governance. (City of Vista, supra, 54 Cal.4th at p. 556; accord California Fed. Savings, supra, 54 Cal.3d at pp. 17, 24.)
Our results under the analytical framework do not mean that the City‘s surplus land policy is an inappropriate subject for municipal regulation, but rather “that under the historical circumstances presented, the state has a more substantial interest in the subject than the charter city.” (California Fed. Savings, supra, 54 Cal.3d at p. 18.) Having found that the statewide concern at present supersedes the City‘s home rule authority on the same subject, we conclude that the City must yield to state law in this case by complying with the affordable housing provisions of the Act.
III. DISPOSITION
The judgment is reversed. The trial court is directed to vacate the order sustaining the City of San Jose‘s demurrer to the first and second causes of action and to enter an order overruling the demurrer to those causes of action. Appellants are entitled to recover their costs on appeal.
Premo, J.
WE CONCUR:
Greenwood, P.J.
Elia, J.
Anderson et al. v. City of San Jose et al.
H045271
| Trial Court: | Santa Clara County Superior Court Superior Court No. 16CV297950 |
| Trial Judge: | Hon. Theodore C. Zayner |
| Counsel for Plaintiffs/Appellants: Sarah Anderson, Joana Cruz, Urban Habitat Program, Housing California | Bay Area Legal Aid Rebekah Evenson Cristina Pena Vazquez Public Interest Law Project Michael Rawson Valerie Feldman Public Advocates Samuel Tepperman-Gelfant David Zisser Weil, Gotschal & Manges Adrian Percer |
| Counsel for Amicus Curiae in support of appellants | Attorney General of California Xavier Becerra Daniel A. Olivas Senior Assistant Attorney General Deborah M. Smith Supervising Deputy Attorney General Jessica E. Tucker-Mohl Deputy Attorney General |
| Counsel for Defendants/Respondents: City of San Jose San Jose City Council | Office of the City Attorney Richard Doyle Nora Frimann Assistant City Attorney Maren J. Clouse Sr. Deputy City Attorney |
| Counsel for Amicus Curiae in support of respondents | Best Best & Krieger Amy E. Hoyt Gregg W. Kettles |
Anderson et al. v. City of San Jose et al.
H045271