Two recent decisions, one issued by the California Supreme Court and the other issued by the California Court of Appeal, offer important judicial guidance on the longstanding issue of reconciling local government land use decisions with the referendum and initiative powers reserved to the people by the California Constitution. In the first case, the power of referendum prevailed despite a resulting inconsistency with the local general plan. In the second case, the express statutory power delegated to local legislative bodies prevailed over the power of initiative.
In Morgan Hill, filed on Aug. 23, 2018, the California Supreme Court held that the people of a county or city can challenge, by referendum, a zoning ordinance amendment adopted by the local government that would bring that ordinance into compliance with an amendment to the local general plan, even though such a referendum would temporarily leave in place a zoning ordinance that is inconsistent with the general plan. In this case, the city amended its general plan to change the land use designation of a vacant lot from industrial to commercial, in anticipation of a proposed hotel development on the site. The city subsequently approved a mirror-image amendment to its zoning ordinance to rezone the property from "Light Industrial" to "General Commercial," one of 12 potential commercial zoning designations in the city. Soon after, a hotel coalition submitted a referendum petition to the city to set aside the ordinance. The city council placed the referendum on the ballot for a special election, but then filed suit to remove it from the ballot and certify the zoning ordinance. The trial court ordered removal of the referendum from the ballot, relying upon the appellate decision in deBottari v. City of Norco (1985) 171 Cal.App.3d 1204 (invalidating a referendum of a zoning ordinance that would result in an inconsistency with the general plan), and the Court of Appeal reversed the trial court.
The Supreme Court vacated the judgment of the Court of Appeal and remanded the case back to the trial court to address limited remaining questions. The Supreme Court held that applicable state planning legislation, in particular those provisions requiring consistency between local general plans and zoning ordinances (Government Code section 65860), did not pre-empt the power of the people of a local municipality to challenge by referendum a property rezoning to comply with a general plan amendment, "at least where other consistent zoning options are available, or the local municipality has the power to make the zoning ordinance and general plan consistent through other means." In so doing, the Court expressly disapproved the reasoning in deBottari and pointed to Government Code section 658560(c) that expressly authorizes the existence of an inconsistency between a general plan amendment and local zoning for a "reasonable time" after such an amendment. According to the Court, the appellate court correctly held that a referendum can invalidate a zoning ordinance amendment approved by a local jurisdiction to achieve compliance with a general plan amendment, where other general plan compliant zoning designations are available that would be consistent with a successful referendum. The Court remanded the case to the Court of Appeal, with directions to remand to the trial court to answer whether other existing or new zoning or general plan designations, to achieve consistency with the general plan and the referendum, were available to the city.
In Moreno Valley, also filed on Aug. 23, 2018, the California Court of Appeal held that the power to approve a development agreement rests exclusively with local legislative bodies and that such approval is subject to referendum but not initiative. In this case, the City Council adopted an ordinance approving a development agreement for the development of a logistics center. After environmental groups sued the city, challenging the project for failure to comply with the California Environmental Quality Act (CEQA), a workforce coalition filed an initiative petition (backed by the developer) with the city that would repeal the ordinance approving the development agreement and approve substantially the same development agreement, replacing the named developer parties in the original version with the term "Property Owners." When the initiative qualified for the ballot, the City Council voted to adopt the initiative rather than submitting it to the voters. The environmental groups then filed petitions for writ of mandate challenging the Council's adoption of the initiative, contending that adoption of a development agreement by initiative violated the development agreement statute (Gov. Code §65864, et seq.) and Article II, Section 12 of the California Constitution, which bars an initiative that names or identifies any private corporation to perform any grant function or to have any power or duty. The trial court denied the petition and, upon appeal by the environmental groups, the Court of Appeal reversed, directing the trial court to issue a writ of mandate directing the City Council to set aside its adoption of the initiative.
Based upon its detailed review of the express statutory language of and legislative history behind the development agreement statute, which expressly provides that a development agreement is a legislative act that shall be approved by ordinance and is subject to referendum, the court concluded there was clear evidence that the legislature intended to exclusively delegate approval of development agreements to governing bodies and to preclude their adoption by initiative. According to the court, "[t]he Legislature's designation of a development agreement as a legislative act, coupled with its decision to reference only referendum, provides textual support for a limitation on initiative that we cannot ignore." The court further agreed with the challengers that the initiative process is inconsistent with the fundamental concept of a development agreement as a negotiated contract and would leave no way to ensure compliance with statutory requirements. Based on its invalidation of the initiative on these grounds, the court chose not to address the appellants' constitutional argument.