In Ruegg & Ellsworth v. City of Berkeley, __ Cal.App.5th __ (2021) (Case No. A159218), the first published appellate decision addressing Senate Bill 35, the First District Court of Appeal reversed a trial court decision in favor of the City of Berkeley regarding a project with apartments over retail filed under the provisions of Senate Bill 35.  The Court of Appeal rejected all of the City’s arguments, reversed the trial court in all respects, including its use of a deferential standard of review, and required the City to issue the requested ministerial permit approving the project.

Codified in Government Code section 65913.4 after its enactment in 2017, SB 35 is one of numerous measures the California Legislature has adopted to address the crisis of insufficient housing in the state.  SB 35 requires a “ministerial approval process” for certain affordable housing projects when a city has failed to provide its share of “regional housing needs, by income category.”  In particular, SB 35 provides that if a proposed development satisfies all of the “objective planning standards” described in the statute, it is subject to a “streamlined, ministerial approval process” and “not subject to a conditional use permit.”  Among the objective planning standards as worded at the time of the developer’s 2018 SB 35 application, the development must be “a multifamily housing development that contains two or more residential units.”  In addition, the development cannot be located on a site where the project would require the demolition of a historic structure that has been placed on a national, state, or local historic register.

The project site is part of a three-block area the City designated as the location of the West Berkeley Shellmound, a local landmark.  The site is also listed on the California Register of Historic Resources.  The Shellmound is a sacred burial site, slowly constructed over thousands of years beginning in 3,700 B.C. and consisting of daily debris and artifacts left by the Ohlone tribe communities that lived on the site.  The landmark designation does not include any above ground buildings or structures but does include “the site itself and all items found subsurface including artifacts from the earliest native habitation, such as but not limited to native tools, ornaments, and human burials.”  Nothing remains of the Shellmound above ground.

The City’s planning department denied the application for ministerial approval, explaining that SB 35 could not constitutionally be applied to the project because of the City’s right, as a charter city, to govern itself with regard to municipal affairs, including protection of local landmarks and approval of commercial uses.  The City also determined that SB 35 does not apply to mixed-use developments but that if SB 35 does apply then the project did not satisfy the requirements for ministerial approval for various reasons, including that the project might require demolition of a historic structure placed on a state and local historic register.

The Court of Appeal first rejected the deferential standard of review the trial court applied because it effectively nullifies the legislative intent in SB 35 by insulating from review the fact-finding underlying a city’s determination whether its ministerial duty to approve a project is triggered.  SB 35 expressly limits local governments’ authority over applications for development of affordable housing projects meeting the specified criteria.  The Court reasoned that “[t]he Legislature’s choice of language makes obvious its intent to constrain local governments’ discretion.”  Thus, under SB 35 the trial court should have reviewed the City’s conclusion that the project would destroy a historical structure for substantial evidence rather than applying a more deferential standard of review.  The City was required to approve the project if the conditions the Legislature specified were met.

The Court then determined that there is no evidence in the record that the Shellmound is now present on the project site in a state that could reasonably be viewed as an existing structure, nor even remnants recognizable as part of a structure.  There is no evidence in the record of a structure that could be demolished by the project, and while there may well be remnants and artifacts that could be disturbed, that is not the issue under SB 35.

The Court rejected the City’s arguments that that applying SB 35 would impermissibly interfere with the City’s “home rule” authority over historic preservation and over commercial uses.  The relevant question is whether the statute is reasonably related to resolving the statewide interest it addresses and does not unduly interfere with the City’s historical preservation authority or its authority over commercial uses.  Relying heavily on the extensive findings in the Housing Accountability Act, the Court reasoned that historical preservation is precisely the kind of subjective discretionary land use decision the Legislature sought to prevent local government from using to defeat affordable housing development.  And the Court concluded that there is clearly a “direct, substantial connection” between SB 35 and the Legislature’s purpose of expediting and increasing approvals of affordable housing developments.  The ministerial approval statute was intended to decrease delays and local resistance to such developments, and does so by removing local governments’ discretion to deny applications for affordable housing developments meeting specified objective criteria.  In addition, the Court concluded that the extent to which SB 35 interferes with local regulation of commercial uses appears to be fairly minimal and incidental to the statute’s purpose of facilitating development of affordable housing.

The Court also rejected the City’s argument that SB 35 does not apply to mixed-use developments is a legal argument that was not required to be included in the required consistency letter.  The Court explained that the City’s position “is puzzling” and defies the spirit if not the letter of SB 35 and accordingly determined that the City failed to adequately inform the developer that the mixed-use nature of project was in conflict with SB 35.  Moreover, the Court considered it clear that SB 35 does apply to mixed-use developments that meet its criteria.  The Court explained that the City’s reading of SB 35 is “strained and unreasonable” and “makes no sense in light of the statute’s purpose.”  As statutes addressing the same subject and advancing the same goal, the Court determined that the Housing Accountability Act and SB 35 should be construed together, and the language used in section the HAA to describe the type of mixed-use development meeting the statutory definition of “housing development project”—“with at least two-thirds of the square footage designated for residential use”—is precisely that used in SB 35 with reference to mixed-uses.

Ruegg & Ellsworth is a landmark new case for proponents of new housing.  The Court’s detailed analysis draws directly from California’s extensive 2017 housing package, particularly its critical amendments to the Housing Accountability Act, and confirms the importance of “the Legislature’s long history of attempting to address the state’s housing crisis and frustration with local governments’ interference with that goal.”