Los Angeles Transit Oriented Communities Program Sees Its Wings Clipped … Somewhat

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[co-author: Luca Trumbull]

Highlights

  • In Fix the City, Inc. v. City of Los Angeles, the Los Angeles Superior Court ruled that conflicts between qualifying Transit Oriented Communities (TOC) Guidelines and specific plan requirements should be resolved in favor of a specific plan.
  • The incentives provided by the TOC Guidelines do not carry legislative authority, while the Westwood Specific Plan was created by ordinance, and the TOC Guidelines therefore lack the requisite authority to override the Specific Plan.
  • Developers should use caution when seeking to deploy TOC Program incentives in the face of more stringent, conflicting regulations within a local specific plan.

In Fix the City, Inc. v. City of Los Angeles (L.A. Sup. Ct. Case No. 20STCP03529, order filed May 24, 2022), the Los Angeles Superior Court ruled that conflicts between qualifying Transit Oriented Communities (TOC) Guidelines and specific plan requirements should be resolved in favor of a specific plan. The development incentives provided by the TOC Guidelines do not carry legislative authority, while the Westwood Community Multi-Family Specific Plan (Westwood Specific Plan) was created by ordinance, and the TOC Guidelines therefore lack the requisite authority to override the specific plan.

This Holland & Knight alert looks at the case and offers recommendations for applicants who may seek access to the Transit Oriented Communities Incentive Program (TOC Program) in the face of more stringent, conflicting regulations within a local specific plan.

Background

In 2016, Los Angeles voters passed Measure JJJ, which among other things, created the TOC Program to provide development incentives for the construction of affordable housing in transit-rich neighborhoods of Los Angeles (the City). The TOC Program is codified within the Los Angeles Municipal Code (LAMC) as Section 12.22.31.

At its inception, the TOC Program directed the City's Director of Planning to prepare guidelines that establish project-specific details governing the TOC Program (TOC Guidelines). The TOC Guidelines set forth important definitions and tier-based incentives that permit development in excess of what would otherwise be allowed in specified transit-heavy areas. These incentives address permitted height, floor area ratios or setback requirements for qualifying housing developments. The TOC Guidelines were drafted (and subsequently amended) by the Los Angeles Department of City Planning.

The Westwood Specific Plan, created by Ordinance No. 163,203, represents one of several specific and community plans and plan overlays that set forth localized development programs and requirements for various areas within the City. The City approved a development request filed under the TOC Program that contemplated the construction of a 10-unit apartment building at 10757-10759 West Wilkins Avenue. The proposed development sought to utilize TOC Program incentives that exceeded the maximum development intensity otherwise allowed under the Specific Plan. The proposed development contemplated a five-story building with 21 parking spaces. Two of the residential units would be set aside for occupancy by qualifying low-income residents. Because the project sits within the RD1.5-1 zone, only six residential units would otherwise be permitted by right; however the TOC Guidelines permit a significant density increase at the location due to its proximity to transit resources. As a result, a 10-unit development consisting of 20 percent affordable housing would be permissible under the TOC Program, despite the zoning restrictions.

The property lies within the Westwood Specific Plan area, which imposes a height limit of 33 feet and sets forth an open space requirement of 3,500 feet on the proposed project. The proposed development does not meet those requirements, having a height of 55 feet tall and only 2,627 feet of open space. These represent a 22-foot height increase and a 25 percent open space reduction.

The City initially approved this housing development as proposed under the TOC Program, based upon the Tier 3 incentives granted under the TOC Guidelines.1 Fix the City Inc., a community group, challenged the approval on the basis that the incentives granted under the TOC Guidelines exceeded the allowable development parameters provided under the Westwood Specific Plan.

Case Summary

The Los Angeles Superior Court was asked to decide if the TOC Guidelines, which were created by the City Planning Commission in order to implement Measure JJJ but were not themselves codified in the LAMC, permitted the City to approve a proposed development whose specifications directly conflict with the specific plan regulations that govern the area. In other words, which provision should govern in an instance of direct conflict: the specific plan or the TOC Guidelines?

Fix the City relied on a textual argument to challenge the development approvals. Ordinance No. 163,203 (creating the Westwood Specific Plan) expressly states that the terms of the specific plan supersede any conflicting provision within the LAMC. Accordingly, the challengers argued, the provisions of the specific plan should govern in any instance where it conflicts with a TOC Guideline incentive – absent any such superseding language within Measure JJJ or the text of the LAMC.

The City also relied on a textual argument. It defended the TOC approval by referring to the text of LAMC Section 12.22.31(b)(1) (codifying the TOC Program), suggesting that the challengers to the TOC-based approvals had not identified an LAMC provision or other authority that confirmed the primacy of specific plans in the face of TOC incentives, and pointed to language confirming that the TOC Program applies to all qualified housing developments. The City argued that 1) mandatory language within LAMC Section 12.22.31 authorized the overriding of conflicting specific plan language and 2) the City's various specific plans are not designed to be development "ceilings," but rather represent "starting point[s] upon to which incentives are provided."2

The Fix the City court was unpersuaded by the City's argument and agreed with the petitioner. The court concluded that the "plain language" of the Westwood Specific Plan confirmed that its standards should prevail over conflicting City programs. Despite the fact that the TOC Program is codified in LAMC Section 12.22.31, the substantive TOC Guidelines that implement the TOC Program (setting forth a menu of development incentives) were created by the planning department without specific legislative action. The court reasoned that the TOC Program incentives could not therefore override more restrictive specific plan requirements. According to the court, the TOC Guidelines "do not have the weight of an ordinance; they cannot permit something beyond what is authorized by the municipal code."3 While the explicit language of Ordinance No. 163,203 (implementing the Westwood Specific Plan) authorizes the specific plan to supersede any provisions of the LAMC, there is no equivalent legislative authority to support the notion that the TOC Guidelines can override the provisions of any specific plan. In fact, the codified language of the TOC Program suggests that the program is meant to be flexible as it interacts with specific plan provisions, but the TOC must recognize specific plan requirements.4

Analysis

The Fix the City court identified an imbalance between the respective texts of Section 3(b) of Ordinance No. 163,203, which codifies the Westwood Specific Plan's superseding authority, and LAMC Section 12.22.31(d), which calls for "flexibility" in the TOC Program to account for restrictive specific plan provisions. On this point, the court reasoned that the City's argument for TOC supremacy only grazes the issue: the TOC Program specifically applies to all qualified housing developments, but the TOC Program, by its own text, suggests that TOC projects should integrate with the City's various specific plans rather than override their provisions. In contrast, Section 3(b) of Ordinance No. 163,203 expressly provides that specific plans override other conflicting provisions of the LAMC. The court concluded that, absent such specific overriding legislative authority, the Westwood Specific Plan authority codified in Ordinance No. 163,203 requires that specific plans must govern proposed developments, rather than the TOC Guidelines created by the City's planning department on a non-legislative basis.5

Considerations and Implications for Property Developers

Los Angeles developers seeking to make use of housing incentives to exceed development limitations imposed by specific plan requirements cannot for the moment rely on the TOC Program's incentives alone. Appeals from both sides of the Fix the City order are likely, but under this interpretation, a specific plan will govern when a proposed development using TOC Guidelines conflicts with specific plan requirements. Notably, developments that utilize TOC Program incentives without specific plan conflicts are unaffected by the Fix the City ruling. Under similar fact patterns, however, property developers seeking to receive incentives listed under the TOC Guidelines that conflict with a local specific plan should consider two alternative courses of action.

Seeking an Adjustment or Exception

LAMC Section 11.5.7(E) affords a pathway for proposed developments that fail to conform with the terms of a specific plan through the application for a Project Permit Adjustment to the Director of Planning. Project Permit Adjustments represent line-item deviations from the provisions of a specific plan that may be granted if the Director of Planning makes certain specified findings. Under a Project Permit Adjustment, the applicant for the development that was the subject of Fix the City could build the project at the proposed height and density, making use of the TOC Program incentives.6

LAMC Section 11.5.7(E)(2) specifies that applicants may seek Project Permit Adjustments to modify the terms governing building height, unit density, setback or open space requirements, permitted signage, parking requirements, landscaped area requirements and other minor specific plan provisions that would not substantially deviate from the intent of the specific plan regulations. In order to approve such Project Permit Adjustments, the Director of Planning must find each of the following:

  1. that special circumstances make strict application of the specific plan regulation(s) impractical
  2. the Director has imposed project requirements and/or decided that the proposed project will substantially comply with all applicable specific plan regulations
  3. the Director has considered and found no detrimental effects of the adjustment on surrounding properties and public rights-of-way
  4. the project incorporates mitigation measures, monitoring of measures when necessary or alternatives identified in the environmental review that would mitigate the negative environmental effects of the project to the extent physically possible

Alternatively, a developer could seek an exception from specific plan regulations, pursuant to LAMC Section 11.5.7(F). The decision-maker for an exception is the local area planning commission, which must hold a public hearing, and a decision to grant an exception requires a specific finding of each of the following:

  1. strict application of the specific plan would result in practical difficulties or unnecessary hardships inconsistent with the general purpose and intent of the plan
  2. there are exceptional circumstances or conditions applicable to the subject property involved or to the intended use or development of the subject property that do not apply generally to other property in the specific plan area
  3. an exception from the specific plan is necessary for the preservation and enjoyment of a substantial property right or use generally possessed by other property within the specific plan area in the same zone and vicinity but which, because of special circumstances and practical difficulties or unnecessary hardships, is denied to the property in question
  4. the granting of an exception will not be detrimental to the public welfare or injurious to the property or improvements adjacent to or in the vicinity of the subject property
  5. the granting of an exception will be consistent with the principles, intent and goals of the specific plan and any applicable element of the general plan

Upon receiving a complete application for an exception from a specific plan, the area planning commission has 75 days to render a decision. The city council is empowered to hear appeals from any such decisions.

Admittedly, a specific plan exception does not represent an incentive to produce affordable housing opportunities and mirrors the theories of hardship or unique circumstances implicit in a zoning variance process. The nature of requisite exception findings means that an exception will not be available to all prospective TOC projects with conflicting specific plan requirements. Nonetheless, it may be a solution in some cases.

Proceeding Under the California Density Bonus Law

An alternative pathway to approval of residential developments containing affordable housing exists under the State Density Bonus Law, codified at Government Code Section 65915 and long recognized as an effective tool for incentivizing affordable housing developments in California. The City has implemented the State Density Bonus Law into the LAMC and affords specific density increases tied to the amount of affordable housing set aside as well as incentives and waivers that could be utilized by developers to avoid the enforcement of specific requirements like the specific plan.

LAMC Section 12.22.A.25 codifies the State Density Bonus Law, allowing up to a 35 percent density bonus (if an affordable housing set aside of 11 percent of a project's "base density" is maintained for very-low-income residents), and up to three incentives for avoiding imposition of more onerous development restrictions. While the incentives and allowances under the TOC Guidelines for projects within transit priority areas are more generous than those afforded under the Density Bonus Law, waivers of requirements such as those imposed by the Westwood Specific Plan are available under a density bonus and are not subject to challenges claiming the defects that were identified in the Fix the City case.

The Density Bonus Law provides the legislative mechanism for overriding restrictive specific plan requirements that the Fix the City court found lacking in the TOC Guidelines. First, LAMC Section 12.22.A.25(a) specifically provides that the purpose of the City's Density Bonus Law is to "establish procedures for implementing State Density Bonus requirements, as set forth in California Government Code Sections 65915-65918, and to increase the production of affordable housing, consistent with City policies." Further, the State Density Bonus Law, at Government Code Section 65915(e)(1), provides:

In no case may a city, county, or city and county apply any development standard that will have the effect of physically precluding the construction of a development meeting the criteria of subdivision (b) at the densities or with concessions or incentives permitted by this section.

Accordingly, the Density Bonus legislation, enacted at both the state level and through local implementing ordinances like the LAMC, provides the authorization for a density bonus project approval to supersede the conflicting terms of a specific plan such as the Westwood Specific Plan.

LAMC Section 12.22.25(e)(1) also provides that a Housing Development Project that qualifies for a Density Bonus shall be granted a specified number of development incentives tied to the amount of units set aside for affordable housing, and subsection (g)(2)(c) states that the Director shall approve a density bonus and requested incentives upon making certain findings, none of which invoke any consideration of local specific plan regulations. These sections indicate that the provisions of the State Density Bonus Law cannot be overruled simply by a conflicting specific plan provision.

Conclusion

Developers should use caution when seeking to deploy TOC Program incentives in the face of more stringent, conflicting regulations within a local specific plan. The Fix the City order suggests that without an adjustment or exception, specific plan regulations will supersede TOC Guidelines in the event of a conflict. That said, developers may have options that can allow them to reach similar results. For example, developers can apply for an adjustment or exception to specific plan regulations under LAMC 11.5.7. Additionally, the Density Bonus Law can achieve sizeable development incentives and waivers of planning and development standards, and can supersede specific plan regulations in the event of a conflict.

Notes

1 The Transit Oriented Communities (TOC) Guidelines establish a tiered system of development incentives that vary based upon the relative ridership of transit stops that are proximate to TOC development sites. Tier 1 incentives apply to proposed projects near major transit resources with lower ridership (usually intersecting regular bus lines) and afford the smallest development incentives. The incentives progressively increase through Tiers 2, 3 and 4 for projects located near commuter bus lines, with incentives maximized for projects near commuter or regional rail lines. The project subject to the Fix the City case qualified for Tier 3 incentives, where the program's "base incentives" included a 70 percent increase in density, up to a 50 percent increase in floor-area-ratio and significantly reduced parking, open space and setback requirements from those otherwise set forth by applicable zoning ordinances.

2 Order Granting Petition for Writ of Mandate at 5.

3 Id. at 6.

4 The Fix the City court suggested that Los Angeles Municipal Code (LAMC) §12.22.31(d) undermined the City's suggestion that the TOC Program was authorized to override conflicting specific plans. That section states that "the TOC Incentives and the required percentages for On-Site Restricted Affordable Units may be adjusted for an individual TOC Affordable Housing Incentive Area through…specific plans or community plan updates, provided that the required percentages for On-Site Restricted Affordable Units may not be reduced below the percentages set forth in" the TOC Program. The cited language references the amounts of maximum density allowed under the City's already-codified Density Bonus Program (LAMC §12.22 A.25, implementing Cal. Govt. Code §§65915-65918). Under that program, the proposed project would have been allowed to contain nine units, with one unit designated as affordable. The order does not explain how a specific or community plan update should be implemented to permit the project request (with one fewer unit).

5 The court also rejected the City's suggestion that the TOC Program implicitly repealed Section 3(b) of Ordinance No. 163,203 through its reference to Flores v. Workmen's Comp. Appeals Bd., 11 Cal. 3d 171, 176 (1974). In that case, the California Supreme Court held that there exists very strong judicial presumption against repeal by implication in instances where two laws conflict. The Flores case involved conflicting Workmen's Compensation provisions but was cited by Fix the City for the proposition that the specific plan was not repealed by implication merely because of its incongruity with the TOC Program and Guidelines. The Fix the City court was tasked with affirmatively searching for a manner in which the terms of both the TOC Program and Ordinance No. 163,203 could coexist. The court relied upon the text of LAMC Section 12.22.31(d) and reasoned that a TOC project could be adjusted to comply with specific plan requirements so long as density is not reduced below a stated minimum.

6 Such a pathway was argued by the Fix the City challengers but necessitates a discretionary approval based upon statutorily required findings, as summarized in these paragraphs. Order, at 4.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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