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Real Estate,
Environmental & Energy,
Administrative/Regulatory

Sep. 24, 2018

Making the coast accessible to people of all economic means

The affordable housing crisis in California is longstanding and well known. A recent California Court of Appeal decision addresses a component of that crisis — namely, the need for lower-cost visitor accommodations along the state’s coast.


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The affordable housing crisis in California is longstanding and well known. A recent California Court of Appeal decision addresses a component of that crisis -- namely, the need for lower-cost visitor accommodations along the state's coast.

In San Diego Unified Port District v. California Coastal Commission, D072954 (Sept. 7, 2018) [ruling attached below], the 4th District Court of Appeal ruled in an unpublished decision that the commission correctly declined to certify a Port District master plan amendment that would have changed the current allowance for hotels on eastern Harbor Island in San Diego Bay from one 500-room hotel to one already proposed 175-room hotel and two still-to-be-planned hotels covering the remaining 325 rooms.

Relying principally on the California Coastal Act's mandate that lower-cost visitor accommodations be "protected, encouraged, and, where feasible, provided," the commission had denied the amendment. The problem with the proposed amendment, according to the commission, was that it failed to set aside a portion of the proposed hotel site for lower-cost accommodations, which the commission defined as those charging no more than $106 per night.

The port then successfully sued, the superior court ruling that the commission's lower-cost accommodation demand would set room rates -- which the Coastal Act forbids the commission to do -- and thereby "impermissibly set [land-use] policy." But on remand the commission denied the proposed plan amendment again, this time because the amendment did not set aside land for "inherently" lower-cost uses, such as "hostels, tent camping, cabins/yurts, and low cost hotels/motels."

The port challenged the commission's renewed denial. Again, the superior court sided with the port, ruling that, even without the explicit setting of room rates, the commission's denial still infringed on the port's prerogative to set land-use policy.

The Court of Appeal disagreed, setting forth in its decision three key holdings in support of the commission's denial.

First, the decision holds that, unlike cities and counties within the coastal zone, port districts have relatively little authority to direct land use within their jurisdictions in a manner contrary to the commission's preferred course.

Second, the decision approves the commission's avoidance of -- or, depending on one's perspective, end-run around -- the Coastal Act's room-rate-setting prohibition. Specifically, the decision allows the commission to deny a master plan amendment for failure to provide enough "inherently" lower-cost facilities, so long as the commission does not demand a legally enforceable cap on what can be charged for rooms in such facilities.

Third, the ruling affirms, using principles of judicial deference to agency interpretations of law, the commission's construction of the Coastal Act to allow it to demand the provision of specific lower-cost accommodations and not to accept in-lieu fees as a substitute.

In a footnote, the decision briefly addresses and rejects the constitutional argument set forth in an amicus brief submitted by the San Diego Port Tenants Association and Pacific Legal Foundation. That brief argued that the commission's denial violated the doctrine of land-use exactions as articulated in the U.S. Supreme Court decisions of Nollan v. California Coastal Commission, 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994). These rulings require that mitigating conditions in land-use permits generally must bear a causal and proportional relationship to the proposed development's impacts. Because, as amici argued, the production of market-rate hotel rooms has no nexus to an increased need for lower-cost accommodations, the commission unconstitutionally denied the port's master plan amendment.

The Court of Appeal rejected the constitutional argument because (1) Nollan and Dolan only apply to conditioned approvals, not denials (a point hard to square with the U.S. Supreme Court's decision in Koontz v. St. Johns River Water Management District, 133 S Ct. 2586 (2013), which applied Nollan and Dolan to an agency's unconditioned permit denial); (2) affordable housing conditions are not subject to Nollan and Dolan (a conclusion consistent with the California Supreme Court's decision in California Building Industry Association v. City of San Jose, 351 P.3d 974 (2015), which upheld against constitutional attack a municipal affordable housing ordinance); and (3) any takings claim is unripe because no permitting decision has been made (a point which fails among other things to address the port's own role as a landowner).

The Court of Appeal's ruling in San Diego Unified Port District underscores the importance of making the coast accessible to people of all economic means. And the need for lower-cost accommodations to achieve that goal can be extraordinary. But as the U.S. Supreme Court observed over 80 years ago, "[e]xtraordinary conditions do not create or enlarge constitutional power." That principle should be kept in mind when assessing the propriety of the commission's practice of demanding lower-cost facilities in exchange for permitting the production of market-rate accommodations.

#349384

Ben Armistead

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