A state law that mandates affordable housing development for projects within the coastal zone does not apply if a housing project that straddles the coastal zone boundary places no houses or other private facilities within the coastal zone, the California Supreme Court has ruled.

“[H]ousing impacts within the coastal zone are what matter,” Justice Ming Chin wrote in the majority opinion, which five other justices joined.

The decision came in one of two cases before the state high court concerning a controversial Catellus Residential Group subdivision overlooking the Ballona wetlands, near Playa del Rey. The coastal zone boundary slices through the 45-acre site of the project known as West Bluff. As approved by the City of Los Angeles and the Coastal Commission in 2000, the project proposes 114 houses and 19 acres of open space. All of the houses would lie on the 33 acres outside the coastal zone; however an access road, a storm drain, water and sewer lines and other utility lines would be in the coastal zone. That infrastructure would require 2.3 acres of grading within the coastal zone.

The groups Coalition of Concerned Communities and Spirit of the Sage Council sued. They argued that the city violated the Mello Act's affordable housing requirement for projects in the coastal zone and that the project's environmental impact report was defective. Los Angeles Superior Court Judge David Yaffe ruled against the project opponents. In a 2-1 decision, the Second District Court of Appeal upheld the lower court (see CP&DR Legal Digest, November 2003).

The state Supreme Court reviewed only the affordable housing issue, not the California Environmental Quality Act questions. A portion of the Mello Act - specifically, Government Code § 65590, subdivision (d) - requires that new housing developments within the coastal zone provide for low- or moderate-income housing where feasible. Under the Mello Act, replacement housing must be provided when affordable housing within the coastal zone is demolished or converted to higher-end housing. Additionally, new housing developments within the coastal zone must provide affordable units as part of the new development or nearby.

The question for the high court was, under the Mello Act, whether a “new housing development” is “constructed within the coastal zone” when infrastructure and open space are within the coastal zone, but all houses are outside the zone.

The project opponents argued that the Mello Act applies whenever any part of a proposed housing development is within the coastal zone. In his dissenting appellate court opinion, Second District Justice Walter Croskey argued that the Mello Act applies when a “substantial part” of the development is within the coastal zone.

The state Supreme Court rejected both of those interpretations. The project opponents' reading “would be too broad to make practical sense,” Justice Chin wrote. “If, for example, a proposed development contains only a drainage pipe within the coastal zone, it is hard to imagine any reason to require affordable housing because of that drainage pipe.” And Croskey's approach would inject uncertainty into the planning process, leading to ad hoc analysis and needless litigation, Chin wrote.

The key circumstance triggering the Mello Act requirement “is the existence of, or proposal to create, a housing impact within the coastal zone,” Chin wrote. “No logical connection exists between the goal of encouraging the preservation or provision of affordable housing in the coastal zone and a development that includes no homes of any price range or any other amenities for the exclusive use of the homeowners, within that zone.”

Because the Catellus project does not have a housing impact within the coastal zone, the Mello Act provisions do not apply, the court concluded.

In a concurring opinion joined by Justice Joyce Kennard, Justice Carlos Moreno wrote that the goal of the Mello Act is to prevent a single economic class from monopolizing the coastal zone. A project that has houses outside the zone but has private amenities - such as a golf course - within the zone would thwart the Mello Act, Moreno wrote. But this was not the case here. The public improvements required by the Catellus project “do not raise the issue of monopolization of coastal land by a single class,” Moreno wrote.

The second case before the state Supreme Court involving the same subdivision is Sierra Club v. California Coastal Commission, No. S116081. The question there is whether the Coastal Commission must consider the coastal zone impacts of a housing development constructed outside the coastal zone. The appellate court said such a review is not required. The case has been briefed but no oral argument has been scheduled. Meanwhile, Catellus has long since begun development of the West Bluff project.

The Case:
Concerned Communities, Inc. v. City of Los Angeles, No. S119897, 04 C.D.O.S. 10777, 2004 DJDAR 14575. Filed December 9, 2004.
The Lawyers:
For Concerned Communities: Craig Sherman, (619) 702-7892.
For the city: Kenneth Fong, deputy city attorney, (213) 978-8239.
For Catellus Residential Group: Robert Crockett, Latham & Watkins, (213) 485-1234.