Developers of the largest downtown housing project in recent memory have challenged a city law requiring new developments to include affordable housing.
Library Gardens L.P., developers of the 176-unit Library Gardens project at 2020 Kittredge St., has appealed its own use permit – which the Zoning Adjustments Board awarded the company in October – to the City Council.
The group, headed by local developer TransAction Companies, is asking the council to strike out those sections of its use permit, which, according to the city’s inclusionary housing policy, require 20 percent of the units in the project to be rented at below-market rates.
Lawyers for Library Gardens charge that the Costa-Hawkins Act, a measure passed by the California legislature in 1995, which placed strict limits on local rent control laws, also invalidates the inclusionary housing policy.
The council will probably hear the appeal in January. If, as expected, the council denies the appeal, a lawsuit testing the legality of the city’s law could follow.
Local lawmakers said on Thursday that they were mystified by the developer’s appeal. The project had won widespread approval from councilmembers, the ZAB and local citizens.
“This really creates bad faith with the community,” said Councilmember Dona Spring. “To try to sneak out of the affordable housing requirements, it really puts TransAction in a bad light.”
Spring added that she doubted the appeal would pass muster at the City Council level.
“The council will be much tougher on this than ZAB was,” she said.
ZAB member Dave Blake said it appears that Library Gardens intends to take the challenge to the judicial system.
“Maybe this is some sort of stunt, but my impression that he thinks that he’s going to win this in the courts,” he said. “He certainly won’t win at the council level.”
Mark Rhoades, current planning manager, said Friday that a legal challenge would only delay Library Gardens’ construction.
He said that the city would withhold a building permit for Library Gardens if there were a dispute over the conditions of the project’s use permit. Building permits – which allow a builder to begin the physical construction on a project – are usually issued as a matter of course after the ZAB has approved a project.
The laws implemented by the Costa-Hawkins Act state that “(n)notwithstanding any other provision of law, an owner of a residential real property may establish the initial and subsequent rental rates” for any unit built after Feb. 1, 1995.
The city’s inclusionary housing requirements mandate below-market rates for 20 percent of the units in new multi-family developments.
While the two laws would appear to be in conflict, there are no legal precedents that state directly that the state law invalidates inclusionary housing policies.
Linda Wheaton, a housing policy specialist with the California State Office of Housing and Community Development, said on Thursday that to her knowledge, no challenge of city inclusionary requirements had been successfully challenged on the basis of Costa-Hawkins.
A developer did challenged the city of Santa Monica’s requirements a few years ago, she said, but the case was settled out of court.
Tad Read, Santa Monica’s housing director, said on Thursday that the suit against his city’s inclusionary requirements did mention Costa-Hawkins, but was primarily focused on the housing element of the city’s general plan.
As part of the settlement, Read said, the city re-wrote its housing element and loosened its inclusionary housing requirements. The Costa-Hawkins challenge was dropped.
Councilmember Kriss Worthington declined to comment on the case on Thursday, but said that other local developers have previously raised the issue of the potential incompatibility between the local and state laws.
He said that several months ago, developer Patrick Kennedy had written to the City Council to make the same point.
Kennedy could not be reached for comment.
John DeClercq, senior vice president of TransAction Companies, said that he could not comment on the appeal while it was pending.
“It’s before the City Council, and we’ll see what they want to do,” he said.
Fred Lupke, a private citizen, has also appealed the Library Gardens project on the grounds that the project’s number of potential occupants had been understated and that the potential impact of the project on the Central Library, which sits next door to the Library Gardens site, had not been researched.