Judge: Mitchell L. Beckloff, Case: 22STCV11610, Date: 2023-08-25 Tentative Ruling

Case Number: 22STCV11610    Hearing Date: August 25, 2023    Dept: 86

SANTA MONICA HOUSING COUNCIL v. CITY OF SANTA MONICA

Case Number: 22STCV11610

Hearing Date: August 25, 2023 

[Tentative]       ORDER DENYING MOTION FOR ATTORNEYS’ FEES  

Petitioners, Santa Monica Housing Council (SMHC), William T. Dawson, and Irma Vargas, move for an award of attorneys’ fees pursuant to Code of Civil Procedure section 1021.5 (Section 1021.5) against Respondent, the City of Santa Monica, in the amount of $519,046.50.[1]  Petitioners also request an award of costs in the amount of $2,521.36.

The court grants Petitioners’ request for judicial notice (RJN) filed June 30, 2023; Petitioner’s second RJN filed July 25, 2023; the City’s RJN filed August 14, 2023; and Petitioner’s third RJN filed August 18, 2023. All RJNs are unopposed. The court does not judicially notice the truth of factual or hearsay statements within these materials, including news articles.  (See e.g., Pet. RJN Exh. BBBB.) 

The City’s evidentiary objections:

[The court notes the rulings on the objections do not contribute to the results on this motion.]

Declaration of Leonora Camner: Objections 2, 3, 4, 5, 6 and 8 are sustained. The remaining objections are overruled. On the issue of timeliness, the City shows no prejudice. The court notes Petitioners served the declaration on July 25, 2023, more than 16 court days before the hearing and before the City filed its opposition.

Declaration of Kenneth Kutcher: Objections 2, 3, 8, 9, 10, 14, 15 (as secondary evidence) and 16 (as secondary evidence) are sustained. The remaining objections are overruled.

Declaration of William T. Dawson: Objections 3, 5 and 7 are sustained. The remaining objections are overruled.  

Declaration of Irma Vargas: Objections 1, 3 and 4 are sustained. The remaining objections are overruled.

The motion is denied.

BACKGROUND AND PROCEDURAL HISTORY

Petitioners dismissed this proceeding as moot before any ruling by this court on the merits of their claims.  Accordingly, this attorneys’ fees motion requires the court to decide whether the litigation was a “substantial factor” in causing the City to “meet its legal obligation to adopt a State-mandated 6th Cycle Housing Element that is certified by the State Department of Housing and Community Development” and comply with other state housing laws, including the State Density Bonus Law (SDBL).  (Memo 1:3-5; Coalition for a Sustainable Future in Yucaipa v. City of Yucaipa (2015) 238 Cal.App.4th 513, 521-522.)

Relevant State Housing Laws

The Legislature has declared that “the availability of housing is of vital statewide importance, and the early attainment of decent housing and a suitable living environment for every Californian, including farmworkers, is a priority of the highest order.”  (Gov. Code, § 65580, subd. (a).)  “Local and state governments have a responsibility to use the powers vested in them to facilitate the improvement and development of housing to make adequate provision for the housing needs of all economic segments of the community.”  (Id., § 65580, subd. (d).)

To further the state’s housing policies, California law “requires every city and county to adopt and update a housing element as part of the general plan. The housing element must assess the local housing need and implement programs to remove constraints and promote development.”  (Kennedy Commission v. City of Huntington Beach (2023) 91 Cal.App.5th 436, 444 [Kennedy].)  State law requires cities and counties to update their housing elements every eight years.  The California Department of Housing and Community Development (HCD) reviews the housing elements and implementing programs to determine whether they substantially comply with state law. (See Gov. Code, § 65580, et seq.; Kutcher Decl. ¶¶ 7-18.) 

California has also adopted a SDBL to facilitate greater production of housing. (See Gov. Code, §§ 65915-65918.)  “ ‘Although application of the statute can be complicated, its aim is fairly simple: When a developer agrees to construct a certain percentage of the units in a housing development for low- or very-low-income households, or to construct a senior citizen housing development, the city or county must grant the developer one or more itemized concessions and a ‘density bonus,’ which allows the developer to increase the density of the development by a certain percentage above the maximum allowable limit under local zoning law. [Citation.] In other words, the Density Bonus Law ‘reward[s] a developer who agrees to build a certain percentage of low-income housing with the opportunity to build more residences than would otherwise be permitted by the applicable local regulations.’ ”  (Bankers Hill 150 v. City of San Diego (2022) 74 Cal.App.5th 755, 769.) 

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The City’s Preparation of Draft 6th Cycle Housing Element and Responses to HCD’s Comments

The City’s efforts to meet its 6th Cycle Housing Element obligations began in late 2019 with a City Council (Council) study session, which was attended by Director of Community Development, David Martin, and members of his staff.  (Martin Decl. ¶ 5.)  In September 2020, the City commenced a public outreach process and a series of study sessions with the Planning Commission, Housing Commission, Rent Control Board, and the Council. (Id. ¶ 6; see also Pet. Exh. R, Figure 1-1, p. 13 [list of public outreach meetings].)

As described by Petitioners’ attorney, “[a] key part of the housing element process involves what is commonly referred to as ‘RHNA’: Regional Housing Needs Assessment. State Housing Element Law establishes a multistep process involving cities, regional associations of government (e.g., Southern California Association of Governments or ‘SCAG’) and HCD in establishing numeric (unit number) housing allocations for each city in the State. The City of Santa Monica (‘City’) falls within the jurisdiction of SCAG. . . . Housing elements are adopted in eight-year cycles. Cities within the SCAG region are in the early stages of the 6th cycle (‘6th Cycle’) of the housing element process (2021-2029).”  (Kutcher Decl. ¶ 11; see Gov. Code,

§ 65584.)

 On March 4, 2021, the City received a RHNA allocation of approximately 8,895 housing units: 2,794 very-low income; 1,672 low income; 1,702 moderate income; and 2,727 above-moderate income.  (Martin Decl. ¶ 7, Exh. 12.)  “This RHNA allocation is substantially greater than the City’s prior 5th Cycle (2013-2021) RHNA allocation (1,674 units)” and requires the City to permit approximately 1,000 housing units annually between 2021 and 2029, as compared to approximately 209 units annually for the prior cycle (2013-2021.)  (Kutcher Decl. ¶ 12; Martin Decl. ¶ 8.)  

On or about May 24, 2021, City staff published a draft 6th Cycle Housing Element.  In June and July 2021, the Planning Commission and the Council conducted hearings on the draft housing element.  On June 15, 2021, the Council directed staff to transmit the draft to HCD, and on July 1, 2021, City staff transmitted the draft to HCD for review.  Petitioners, through their attorneys at Harding, Larmore, Kutcher & Kozal (HLKK) submitted written comments on the draft housing element to the Planning Commission, the Council and HCD.  (Kutcher Decl. ¶¶ 28-33, Exh. H, I, K, L; Martin Decl. ¶¶ 9-11, Exh. 13-17.) 

On August 30, 2021, HCD issued a letter to the City concluding that although the draft housing element “addresses many statutory requirements . . . revisions will be necessary to comply with State Housing Element Law.”  (Martin Decl. ¶ 13; Resp. Exh. 19.)  The letter referenced the comments of Petitioner SMHC through attorneys Ken Kutcher and Lee Kaplan of HLKK.  (Resp. Exh. 19; Kutcher Decl. ¶ 33.)  An appendix to HCD’s letter describes revisions necessary to comply with the State Housing Element Law.  (Resp. Exh. 19; see Opposition 8:4-13 and Martin Decl. ¶ 13 [summarizing some revisions deemed “necessary” by HCD].) 

On September 8, 20, and 24, 2021, the Planning Commission conducted hearings on the proposed revisions and recommended the Council adopt the draft with proposed changes. (Martin Decl. ¶14; Exh. 20-25) On October 12, 2021, the Council conducted a hearing and adopted the draft housing element. (Martin Decl. ¶15; Exh. 26-28). On November 10, 2021, the City transmitted the housing element to HCD. (Martin Decl. ¶ 16.) Along with the housing element, the City sent a letter signed by the Mayor and City Manager concluding the “City of Santa Monica’s Final Housing Element is fully compliant with State law” and urged “expeditious certification by HCD.”  (Kutcher Decl. ¶ 40, Exh. S.)  

On February 8, 2022, the City received a letter from HCD advising that although the 6th Cycle Housing Element addressed “many statutory requirements,” “revisions will be necessary to comply with State Housing Element Law.” (Resp. Exh. 29 at 1.)  HCD’s letter referenced comments from attorney Kutcher of HLKK, among other commenters. (Resp. Exh. 29 at 1.)    An appendix to HCD’s letter described revisions necessary to comply with the State Housing Element Law.  (Resp. Exh. 29 at 1; see also Kutcher Decl. ¶ 41, Exh. T.) 

Starting in February 2022, after receiving HCD’s letter, City staff began efforts (including teleconferences with HCD staff) to address HCD’s comments. (Martin Decl. ¶ 20; Yeo Decl. ¶ 3, Exh. 61.)  After contacting HCD for guidance, the City conducted study sessions related to the housing element in March, April and June 2022. (Martin Decl. ¶ 21; Exh. 30-37.)  City staff prepared draft “redline” revisions of the housing element to address comments made by HCD.  (Martin Decl. ¶ 22.) 

March 2022 Discussion of Tolling Agreement with Petitioners

Through HLKK, Petitioners discussed with the City Attorney’s office the possibility of tolling the statute of limitations for this proceeding in March 2022.  (Kutcher Decl. ¶¶ 51-52.)  On March 10, 2022, HLKK emailed a letter to the Interim City Attorney, Joseph Lawrence, and Deputy City Attorney, Heidi von Tongeln, suggesting SMHC and the City “enter into a tolling agreement . . . whereby the parties agree that to the extent the time to file suit challenging the City’s failure to adopt a Housing Element that complies with California Housing Element Law (Gov’t Code

§ 65580, et seq.) would otherwise expire while the City evaluates its next steps, such statute of limitations will be extended through January 18, 2023, to give the City time to adopt a compliant Housing Element and associated implementing ordinances.”  (Pet. Exh. FF at 1.)  Petitioners’ letter also stated: “SMHC believes the process of considering revisions to the 6th Cycle Housing Element would benefit from an absence of pending litigation, but we will not allow the statute of limitations to expire on a challenge to the adequacy of the City’s adopted

6th Cycle Housing Element. Absent a tolling agreement, SMHC will file its lawsuit to

preserve its right to invoke judicial review of the 6th Cycle Housing Element.”  (Pet. Exh. FF at 3.) 

At a teleconference with attorney Kutcher on March 23, 2023, Deputy City Attorney Heidi von Tongeln explained the City would not enter a tolling agreement at that time because the City “was already actively seeking compliance and would continue to do so irrespective of any potential lawsuit seeking to compel the City to do so” and because Petitioners could “bring a future claim to compel compliance within 60 days of receiving the HCD’s determination on the revised Housing Element.”  (von Tongeln Decl. ¶ 6 [citing Gov. Code, § 65009, subd. (c)(2)].)

Council’s agenda for a March 22, 2022 meeting referenced the following closed session agenda item: “Conference with Legal Counsel—Anticipated Litigation: Anticipate significant exposure to litigation Pursuant to Government Code Section 54956.9(d)(2): 6th Cycle (2021-2029) Housing Element.”  (Pet. Exh. HH.)

Petitioners File Writ Proceeding

On April 4, 2022, Petitioners filed their verified petition for writ of mandate and complaint for declaratory relief.  The petition included three causes of action for a writ of mandate. 

Through their first cause of action, Petitioners sought a writ directing the City to adopt a legally compliant 6th Cycle Housing Element after HCD issued findings in February 2022 that the City’s October 2021 housing element did not substantially comply with State Housing Element Law.  “Consistent with HCD’s findings, Petitioners assert[ed] and allege[d] that the City’s adopted Housing Element violates the substantive requirements of State Housing Element Law in the following respects: A. Suitable Sites Inventory . . . B. Analysis and Mitigation/Removal of Governmental Constraints . . . [and] C. Housing Element Programs.”  (Pet. ¶ 47 [emphasis added].) 

Through their second cause of action, Petitioners sought a writ directing the City “to implement its adopted Housing Element in accordance with the Housing Element’s schedule of actions, including without limitation Programs 1A (without limitation as to parcel size), 1F, 1J and 2D.”  (Pet. Prayer ¶ 2; see also Id. ¶¶ 59-63 [summarizing relevant programs and timetables of City’s adopted housing element].) 

Through their third cause of action, Petitioners sought a writ directing the City “to amend and implement its density bonus ordinance in accordance with [SDBL], including without limitation, increasing the maximum available density bonus to 50 [percent] for mixed-income projects, conceding its applicability to Tier 2 housing projects, and adopting timelines for ministerial processing of density bonus applications.”  (Pet. Prayer ¶ 3; see also Id. ¶¶ 75-83 [alleged deficiencies in City’s compliance with SDBL].) 

For all causes of action, Petitioner prayed for an award of attorneys’ fees pursuant to Section 1021.5.  (Pet. Prayer ¶ 4.)

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June 21, 2022 Council Meeting: After Deliberation, Council Votes to Transmit Draft Housing Element to HCD

On June 21, 2022, the Council reviewed draft revisions to the housing element and made recommended revisions.  (Martin Decl. ¶ 24; Resp. Exh. 34-37, and Exh. 62 at 10- 18.)  City staff recommended the Council direct staff to transmit the draft housing element to HCD for review and comment. (Resp. Exh. 37 at 4.)    

During the June 21 Council meeting, as well as in a prior study session before the Council on April 26, 2022, City staff outlined the statutory consequences for the City being out of compliance with state law. (Martin Decl. ¶¶ 23-24, Resp. Exh. 34 at 6; Exh. 35 at 5-6; Exh. 62 at 1-3.)  Specifically, City staff’s report for the June 21 Council meeting stated:

As explained in the April 26, 2022 Council report providing a progress update on HCD consultations in addition to a summary table of consequences of being out of compliance, October 15, 2022 is the next consequential milestone in Housing Element law as it is the date by which the City must rezone to accommodate the RHNA allocation.

As also explained in the April 26, 2022 Council report, the consequences for jurisdictions that have failed to adopt a housing element that has been found by HCD to be in substantial compliance include the following:

1. Denial of state funding where eligibility is contingent upon a housing element that has been found by HCD to be in substantial compliance. Gov’t Code § 65589.11

2. Required by-right approval of housing development projects with at least 20% of units affordable to 60% AMI households or 100% Moderate, even if the project exceeds zoning or general plan maximums. Any conditions placed on such projects cannot render the project infeasible. Gov’t Code § 65589.5(d)(1) & (5)(B)

3. By-right approval of housing developments that comply with standards listed in the housing programs for rezoning and for which 49% of the housing units are affordable for very low, low-, and moderate-income households proposed on a site required to be rezoned. Gov’t Code § 65583(g)

4. Legal action by any interested party to enforce programs of the housing element authorized under Code of Civil Procedure § 1085. Gov’t Code §§ 65583(h), 65587(b)

5. HCD notification to the Attorney General and potential judicial action to force substantial compliance plus fines in the amount of $10,000 per month, not to exceed $100,000 per month, plus continuing court jurisdiction. Gov’t Code § 65583(j, k, l) (Resp. Exh. 34 at 6-7.)

City staff provided a similar explanation of the consequences of non-compliance with state law in a slide presentation and discussion at the June 21, 2022 Council meeting.  (Resp. Exh. 35 and 62 at 1-3.)

Minutes from the June 21, 2022 Council meeting summarize Council’s discussion of certain concerns as follows:

Considerable discussion ensued on topics including, but not limited to: residents want to know why isn’t the city fighting HCDs RHNA allocation; concern that the largest part of the proposed 1880 units being built are in the Bergamot, Pico neighborhood; more density on residential, creates more gentrification; a contradiction that we have a water shortage statewide, but the state is requiring cities build all of this additional housing; find an opportunity to reboot the TORCA plan to allow residents to build generational wealth; it’s upsetting to hear of affordable housing being built in Bergamot instead of having it built where the maintenance warehouse currently is; concerns about having no parking for family units; look at other areas for housing to create a quality of life for people who can’t afford to live here, when looking at height, FAR, etc.; look at TORCA options as a feasible option for some older private owned buildings; what is being proposed is not going to work; we have our own good plan, that would work and create affordable housing; this feels like an intellectual exercise; appalled by the way the state is forcing us to do this, it’s just wrong; important to incorporate green space in this plan; maybe consider a rent-to-own option; not having parking does not decrease rent; some of the residents want to challenge HCD, because it will change the essence of what is Santa Monica; regardless to what we decide tonight, a lot of this is theoretical; and, we may look back four years from now, and realize that HCD is not able to enforce it. (Resp. Exh. 37 at 5-6.)

Initially at the June 21, 2022 Council meeting, a motion to approve the staff recommendation failed in a 2 to 5 vote.  (Resp. Exh. 37 at 6-7 and Exh. 62 at 10-18.)  Shortly after the first motion failed, Mayor Himmelrich made the following comment:

Well, so, okay wait. Okay, so, um, let me just say that if we aren’t to forward this to HCD, then we need to sue. We have two choices: we either do this or we sue, and we’re going to get sued. You know there are lawsuits, but I believe that there is a writ here that this is arbitrary and capricious. And I think that I’ve said this before, I do think there is, but if we aren’t going to move forward, I mean, are we sending staff? If we aren’t going to accept this draft, what are we going to direct staff to do?

. . . .

You have a group of people who, I’m sorry, we have a group of people who think we should be doing a lot more development and a group of people who think we should be doing a lot less development, and those are the two groups, so I want to see all of you give direction to staff, all five of you. (Resp. Exh. 62 at 4; see also Kutcher Decl. ¶¶ 70-71 [highlighting statements of Mayor and Councilmembers at meeting].) 

Councilmembers who voted “no” on the motion to approve the staff recommendation then explained the reasons for their votes.  (Resp. Exh. 62 at 4-10; see Exh. 37 at 6 [summary of explanations for “no” votes].)  The reasons stated for the “no” votes included a need for additional work on “affirmatively furthering fair housing” and homeownership (members Davis, de la Torre, Negrete); concerns about Bergamot (member Parra); and a need to “stand up for the residents” and “join other cities to reconsider what is being put on our city” (member Brock).  (Resp. Exh. 62 at 4-10; see Exh. 37 at 6.)

Thereafter, City staff person Jing Yeo, who had been working closely with HCD on the draft housing element, commented:

So, when I think, you know, what I’m hearing here is just a lot of frustration and concern with if this passes. No[t] necessarily just with this housing [inaudible], but all of the requirements that the State is imposing. That is acknowledge[d], that is understood. This is a very – this is a different housing element cycle. It’s different. . . . That is, for better or for worse, it is not the charge that we were given by the State at this point, you know. And I hear you in terms of all these concerns, but I do want to distinguish between what we need to do to get to a compliant housing element and [w]hat you want to desire to do in shaping Santas Monca. There is – what you do in this housing element is a minimum. . . .  And so I just want to, you know, like we hear you. Like I – we’ve heard this. We’ve been doing this for 2 ½ years. We’ve been hearing this in the community. This is – it is a very, very different not Santa Monica way, you way, approach to this plan and we’re doing the best we can given the disparate opinions and voices. And not just on this Council, but throughout this community and housing providers and people involved in housing preservation. So, as I just kind of heard the listing of things, I think we’re just trying to distinguish on what are the concrete things that you’re saying and the housing element and, you know, like I said, what the redlines we’re presenting to you tonight are the results of consultations with HCD. They have seen these redlines. They have told us that preliminarily these do meet – they believe like we’re heading in the right direction in order to achieve a compliant housing element, but there are specific things that you want and I understand that those are things that could either be a separate Council direction. (Resp. Exh. 62 at 10-11.)

Shortly before a vote to reconsider, another City staff person echoed Yeo’s comments and advice:

“Yeah and something I want to reiterate, which is what Jing said, which is this is just the draft, right? We still have the time to adopt the plan. This gets it back on the table and again, it doesn’t rule out some of the things that you’ve expressed interest in in implementing additional things that are above and beyond what the minimum requirements are to have a substantial housing element.  So, you know, I think what she said is very important to understand. Again, it keeps it on the table and nothing prevents us from continuing to advocate through our lobbyists.”  (Resp. Exh. 62 at 12-13.) 

After further deliberation by the Council at the June 21, 2022 meeting, in a 6 to 1 vote, the Council passed a motion to transmit the draft housing element to HCD for review and comment, with ongoing work on the concerns expressed by the Council.  (Resp. Exh. 37 at 6-7 and Exh. 62 at 10-18.)

Senate Bill 197 Extends Deadline for Re-Zoning for Jurisdictions with Compliant Housing Elements

On June 30, 2022, shortly after the June 21, 2022 Council meeting, Senate Bill 197 amended the Government Code to add section 65583.4 and extended the existing one-year deadline for re-zoning to three years for cities with compliant housing elements. (Resp. Exh. 57) Under Senate Bill 197, if the City’s housing element was certified by October 15, 2022, the City would have an additional two years to complete upzoning to implement its Housing Element Implementation Program, or until October 15, 2024, rather than October 15, 2022. (Martin Decl., ¶¶ 26-27; Exh. 42 at 2; Exh. 43 at 4; see also Kutcher Decl. ¶ 83.)

Stay of Litigation

On July 7, 2022, based on a joint stipulation filed by the parties, the court entered an order staying the entire writ proceeding until October 17, 2022.  The recitals to the joint stipulation state in part:

4. WHEREAS, the Parties have recently entered into a tolling agreement whereby Respondent is processing a revised Housing Element without prejudice to its defenses in this litigation;

5. WHEREAS, Respondent has committed to adopting a revised Housing Element and implementation of certain associated programs therein by October 15, 2022;

6. WHEREAS, the Parties have agreed to seek a stay of proceedings in the above-referenced litigation during the tolling period, provided certain interim milestones are reached;

7. WHEREAS, the Parties have engaged in a good faith attempt to find a path forward that is not reliant on Court intervention at this time. . . . (Stipulation filed 7/5/22.)

HCD Finds Draft Amended Housing Element Will Comply with State Law and the Council Adopts the Amended 6th Cycle Housing Element

On July 8, 2022, the City submitted its revised housing element to HCD for review. (Resp. Exh. 38.) 

On July 27, 2022, HLKK submitted a letter on behalf of Petitioners to HCD commenting on the revised housing element.  (Kutcher Decl. ¶ 76, Exh. TT.)  On September 6, 2022, HCD advised the draft housing element will comply with the State Housing Element Law once adopted by the Council and submitted to HCD for official review. (Resp. Exh. 40.)  HCD’s letter did not reference comments made by HLKK or attorney Kutcher. (Resp. Exh. 40.) 

On October 11, 2022, the Council considered and ultimately adopted the amended 6th Cycle Housing Element.  HLKK submitted comments to the Council the previous day, on October 10, 2022.  (Resp. Exh. 46 at 9-10 and Exh. 47, 63; Kutcher Decl. ¶¶ 80-81, Exh. WW-YY.)  Prior to the Council’s decision, City staff commented in a staff report, and at the Council meeting, about the consequences of being out of compliance with the State Housing Element Law.  (Martin Decl. ¶ 34 and Exh. 42; see also Exh. 41 [October 5, 2022 City Memo & HCD Technical Advice Letter on Builder’s Remedy Projects].) 

On October 14, 2022, HCD certified the City’s housing element as compliant with state law.  (Resp. Exh. 48.)

Applications for Builder’s Remedy Projects

As explained in staff reports to the Council, and also in a memorandum prepared for the Council in early October 2022, one of consequences of a failure to comply with the State Housing Element Law is the so-called “Builder’s Remedy” of Government Code section 65589.5.  (See Martin Decl. ¶¶ 32-33, Exh. 41-42.)  The memorandum describes the “Builder’s Remedy” as follows:

The Housing Accountability Act, Government Code Section 65589.5 (the “HAA”), includes a special provision [Government Code Section 65589.5(d)], colloquially referred to as the “builder’s remedy”, to encourage housing production that takes effect when a City’s Housing Element is out of compliance.

When does the builder’s remedy apply?

For the City of Santa Monica, the builder’s remedy has been an option since at least February 8, 2022, when the California Department of Housing and Community Development (“HCD”) issued a letter notifying the City that further revisions to the Housing Element would be required for it to meet all statutory requirements. The builder’s remedy will continue to be an option until the Housing Element is in compliance with State Housing Element law. As explained further below, if the City does not adopt a Housing Element that is determined to be compliant with State law by October 15, 2022, the builder’s remedy will continue to be an option for applicants until the City has completed all upzoning necessary to demonstrate capacity to meet the City’s Regional Housing Needs Assessment (“RHNA”) allocation.

. . . .

What standards must a builder’s remedy project follow and can the City deny a builder’s remedy project?

A builder’s remedy project does not need to comply with zoning or General Plan standards—it can be much larger than the City would otherwise permit. The City cannot deny a builder’s remedy project solely on the basis that it does not comply with the zoning ordinance or General Plan. Further, the City also cannot change standards after the application has been submitted. (Resp. Exh. 41.)

On July 21, 2022, HLKK filed a preliminary application for a Builder’s Remedy project, based upon HCD’s decision the City’s housing element was not compliant with the state’s housing law.  HLKK filed the application on behalf of applicant E.D. Flores, LLC for property located at 1420-1422 20th Street.  The application described the project as a five-story, 45-unit mixed-use housing development project.  The application listed Attorney Kutcher as the contact person for the project.  (Resp. Exh. 71; Cola Decl. ¶ 10.) 

From early September 2022 until October 11, 2022, the date the Council ultimately approved the housing element, City received approximately 12 other Builder’s Remedy applications.  (Martin Decl. ¶ 32 and Exh. 41.)  The development applications would add approximately 3,968 market rate units and approximately 829 affordable units to the City’s housing inventory.  (Martin Decl. ¶ 32 and Exh. 41.)     

Petitioners Dismiss First and Second Causes of Action; Trial Date Set for Third Cause of Action

On October 21, 2022, after the termination of the litigation stay, the court held a trial setting conference.  The parties agreed the first and second causes of action were moot.  The court scheduled a hearing on the third cause of action for June 30, 2023 and set a briefing schedule. 

On December 1, 2022, City filed an answer with multiple affirmative defenses.

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Density Bonus Proceedings

From November 2022 to March 2023, HLKK submitted multiple letters on behalf of SMHC to the Planning Commission and the Council on topics of inclusionary housing regulations and the density bonus regulations; the topic of adopting a timetable for ministerial approvals of housing projects; and other density bonus matters.  (Kutcher Decl. ¶¶ 87-100 [and cited exhibits].)  During this period, Attorney Kutcher testified on behalf of SMHC at Planning Commission and Council meetings related to the density bonus regulations.  (Kutcher Decl. ¶¶ 87-100.)

On March 21, 2023, the Council adopted an ordinance making updates to the City’s density bonus regulations.  (Martin Decl. ¶ 44, Exh. 55.)  The City submits evidence that City made these updates in response to clarification in the SDBL provided by Assembly Bill 2334 and technical guidance from HCD.  (Martin Decl. ¶¶ 39-45.) 

Petitioners Dismiss Third Cause of Action and File Motion for Attorneys’ Fees

On May 2, 2023, the court granted Petitioners’ ex parte application to vacate the trial date on the third cause of action.  Pursuant to Petitioners’ oral request, the court ordered the petition dismissed without prejudice.[2] 

ANALYSIS 

An award of attorney fees is appropriate “to a successful party . . . in any action which has resulted in the enforcement of an important right affecting the public interest.”  (§ 1021.5.)  “When it comes to section 1021.5, the successful party is ‘the party to litigation that achieves its objectives.’ ”  (La Mirada Avenue Neighborhood Assn. of Hollywood v. City of Los Angeles (2018) 22 Cal.App.5th 1149, 1157.)  The “critical fact is the impact of the action, not the manner of its resolution.” (Hogar Dulce Hogar v. Community Development Com. of City of Escondido (2007) 157 Cal.App.4th 1358, 1365.) 

The three factors necessary to support an award of attorney fees to a successful party pursuant to Section 1021.5 are: “(1) [the] action has resulted in the enforcement of an important right affecting the public interest,’ (2) a significant benefit, whether pecuniary or nonpecuniary has been conferred on the general public or a large class of persons and (3) the necessity and financial burden of private enforcement are such as to make the award appropriate.” (In re Conservatorship of Whitley (2010) 50 Cal.4th 1206, 1214.)  

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Legal Standard – Catalyst Theory

All three of Petitioners’ causes of action were dismissed as moot without a ruling by this court on the merits. Thus, Petitioners did not prevail by virtue of a court ruling or judgment. Petitioners therefore rely on the catalyst theory to prove they were “successful parties” within the meaning of Section 1021.5. 

“The ‘catalyst theory’ permits an award of attorney fees even when the litigation does not result in a judicial resolution if the defendant changes its behavior substantially because of, and in the manner sought by, the litigation. [Citation.] To obtain attorney fees under this theory, a plaintiff must establish that (1) the lawsuit was a catalyst motivating the defendants to provide the primary relief sought; (2) the lawsuit had merit and achieved its catalytic effect by threat of victory, not by dint of nuisance and threat of expense; and (3) the plaintiffs reasonably attempted to settle the litigation prior to filing the lawsuit.”  (California Public Records Research, Inc. v. County of Yolo (2016) 4 Cal.App.5th 150, 191 [CPRR].)

“It is not necessary for a plaintiff to achieve a favorable final judgment to qualify for attorneys’ fees so long as the plaintiff’s actions were the catalyst for the defendant’s actions, but there must be some relief to which the plaintiff’s actions are causally connected.”  (Coalition for a Sustainable Future in Yucaipa v. City of Yucaipa (2015) 238 Cal.App.4th 513, 521 [Yucaipa].)  “At the very least, a plaintiff must establish the precise factual/legal condition that it sought to change or affect as a prerequisite for establishing the catalytic effect of its lawsuit.”  (Ibid.)  “To satisfy the causation prong of the catalyst theory, the plaintiff need not show that litigation was the only cause of the defendant's acquiescence, only that it was a substantial factor contributing to defendant's action.”  (Id. at 522.)

“Thus, when a plaintiff seeks fees under a catalyst theory, courts generally must conduct the following inquiry: (1) identify the plaintiff's primary litigation objectives, (2) compare the results obtained to determine whether the plaintiff in fact achieved those objectives, and, if so,

(3) decide whether the lawsuit was a material factor or contributed in a significant way to those results. . . . [¶] Because defendants usually are reluctant to concede that litigation induced them to provide the relief sought, ‘[c]lues to the provocative effects of the plaintiffs’ legal efforts are often best gleaned from the chronology of events . . . .’ [Citations.] ‘When, after litigation is initiated, a defendant has voluntarily provided the relief a plaintiff is seeking, the chronology of events may raise an inference that the litigation was the catalyst for the relief.’ [Citations.] This shifts to the defendant the burden to produce evidence to rebut that inference.  [Citation.] The ultimate burden of proof, however, remains on the claimant to establish each element of the statute.”  (Department of Water Resources Environmental Impact Cases (2022) 79 Cal.App.5th 556, 572-573.) 

“[T]he question of whether plaintiffs’ action is causally linked to the achievement of the relief obtained is one of fact.” (Wallace v. Consumers Coop. of Berkeley, Inc. (1985) 170 Cal.App.3d 836, 845; accord Grimsley v. Board of Supervisors (1985) 169 Cal.App.3d 960, 969.)

Petitioners Were Not Successful Parties or Catalysts for the First Cause of Action

Through their first cause of action, Petitioner sought a writ directing the City to adopt a legally compliant 6th Cycle Housing Element.  (Pet. ¶¶ 23-56 and Prayer ¶ 1.)  As Petitioners state, these litigation objectives were obtained when the City amended its 6th Cycle Housing Element and received HCD’s certification.  (Memo 4:5-10.)  However, for Petitioners to be successful parties, the court must find that the lawsuit was a “substantial,” “material,” or “significant” factor contributing to those results.  (Yucaipa, supra, 238 Cal.App.4th at 522; see also Department of Water Resources Environmental Impact Cases, supra, 79 Cal.App.5th at 572-573.)  Petitioners have the burden of proof on that issue. In its factual findings on the issue of causation, set forth below, the court considers several factors discussed in the parties’ legal briefs.[3] 

              The Chronology of Events and the City’s Ongoing Consultations with HCD

Petitioners suggest the chronology of events supports an inference this proceeding was a substantial factor in the Council’s actions to approve the amended housing element, later certified by HCD, because: (1) the Mayor and City Manager wrote an “antagonistic” and “indignant” letter to HCD in November 2021 asserting the initial draft housing element “[wa]s fully compliant with State law”; (2) Petitioners commented on that draft to HCD in November 2021 and HCD found the draft non-compliant for reasons that “mirrored” Petitioners’ concerns; and (3) the Mayor referred to “lawsuits” in her comments after the motion to transmit the revised housing element to HCD failed on June 21, 2022 and “only then did the City Council change course and vote 6-1 in favor of submitting the Draft Amended Housing Element to HCD for review.”  (Memo 6-7; Kutcher Decl. ¶ 40.) 

The City’s November 10, 2021 letter to HCD does merit much weight in the causation analysis.  (See Pet. Exh. S [City letter].)[4]  The City’s letter merely reports the City approved a draft of the housing element in October 2021 that the City believed to be compliant with state law, but was thereafter not approved by HCD.  Similarly, that HCD found the October 2021 draft housing element to be non-compliant for reasons that “mirrored” comments made by Petitioners in November 2021 does not prove this litigation, filed in April 2022, was a substantial factor in the City’s ultimate approval of a legally compliant housing element.  As further discussed later, the generalized references to litigation risk in the Council meetings, including Mayor Himmelrich’s comments after the initial vote on June 21, 2022, also do not demonstrate this litigation was a substantial factor in the Council’s decision making.

The court acknowledges Petitioners’ central point that the City obtained compliance by the Council decisions in June 2022 and October 2022, after they filed their litigation in April 2022, and after Petitioners continued to provide comments in the administrative proceedings before the HCD, Planning Commission, and the Council.  While that chronology suggests the possibility this litigation played a substantial role in causing City to adopt a legally compliant housing element, the full timeline and context of the City’s actions must be considered.

The City’s efforts to meet its 6th Cycle housing element obligations began in late 2019 and continued in public outreach meetings before the Planning Commission, Housing Commission, Rent Control Board, and the Council in 2020 and 2021.  (Martin Decl. ¶¶ 5-6; Pet. Exh. R, Figure 1-1, p. 13 [list of public outreach meetings].)  The City’s preparation of a compliant housing element benefited from public comments from many interested parties other than Petitioners, including housing advocacy groups, researchers, developers, and residents.  (See e.g., Resp. Exh. 2, 4, 27-28, 36, 44-45, 53.) 

Significant in the court’s view, the City took steps to address HCD’s comments on the October 2021 draft housing element as soon as it received HCDs letter on February 8, 2022—including a teleconference with HCD on February 14, 2022.  (Martin Decl. ¶ 20 and Exh. 61.)  On March 2, 2022, the City conducted a study session before the Planning Commission to discuss HCD’s February 8, 2022 comments on the draft housing element.  (Id. ¶ 21, Exh. 30.)  At the June 21, 2022, Council hearing, City staff person Yeo also explained “the redlines we’re presenting to you tonight are the results of consultations with HCD. They have seen these redlines. They have told us that preliminarily these do meet – they believe like we’re heading in the right direction in order to achieve a compliant housing element.”  (Resp. Exh. 62 at 10-11.)  Those consultations with HCD began before Petitioners filed this writ proceeding in April 2022 or even proposed a tolling agreement in March 2022. 

Further, the evidence shows, after the Petitioners filed this litigation, the City continued to consult with HCD and made changes to the draft housing element based on such consultations.  (Resp. Exh. 61 and 62 at 10-11.) In addition, as discussed later, the consequences of failure to adopt a compliant housing element by the statutory deadline, as explained by City staff in April 2022, June 2022, and October 2022, also motivated the Council’s actions to adopt the housing element that was certified by HCD.  Accordingly, the record also demonstrates the City’s actions before and after Petitioners filed the lawsuit in April 2022 resulted in the City’s compliance with the State Housing Element Law. 

When the full history of the City’s adoption of the 6^th Cycle housing element is considered, the chronology does not demonstrate Petitioners’ lawsuit substantially contributed to the City achieving compliance with state law.  Further, the court finds the evidence of the City’s ongoing consultations with HCD to be particularly persuasive as to what motivated the City.  (See e.g., Martin Decl. ¶ 20, Exh. 61, and Exh. 62 at 10-11.)  The court does not view the ongoing consultations with HCD as “an intervening cause” (see Department of Water Resources Environmental Impact Cases, supra, 70 Cal.App.5th at 575), but rather as affirmative evidence that, when combined with other factors discussed below, supports a finding Petitioners’ litigation was not a substantial factor contributing to the City’s actions related to the first cause of action. 

The Statutory Consequences of Failure to Approve a Compliant Housing Element by October 15, 2022 Motivated the Council’s Actions

Respondent contends the Council’s approval in June 2022 and October 2022 of the final amended housing element was motivated by the statutory consequences of a failure to adopt a compliant housing element by the statutory deadline. Such fears included the “Council’s collective fear of massive Builder’s Remedy developments due to the City’s non-compliance, requiring the City to approve projects even though they grossly exceeded zoning maximums.”  (Opposition 15:27-16:1.)  The court agrees. 

During the June 21, 2022 Council meeting, as well as in a prior study session before the Council on April 26, 2022, City staff outlined the consequences for the City’s failure to comply with state law. (Martin Decl. ¶¶ 23-24, Resp. Exh. 34 at 6; Exh. 35 at 5-6; Exh. 62 at 1-3.)  Among other consequences, City staff referred to “Builder’s Remedy” developments, i.e., the “required by-right approval of housing development projects with at least 20% of units affordable to 60% AMI households or 100% Moderate, even if the project exceeds zoning or general plan maximums.”  (Resp. Exh. 34 at 6-7.)  In addition to the consequences of the City’s failure to conform with state law, City staff also stressed the amended housing element was based on consultation with HCD and approving the draft would not prevent the City from taking other options to protect its interests, including lobbying.  (Resp. Exh. 62 at 10-13.) 

On June 30, 2022, nine days after the June 21, 2022 Council meeting, Senate Bill 197 amended the Government Code to add section 65583.4 extending the existing one-year deadline for re-zoning to three years. (Resp. Exh. 57) Under Senate Bill 197, if the City’s housing element was certified by October 15, 2022, the City would have an additional two years to complete upzoning to implement its Housing Element Implementation Program, or until October 15, 2024, rather than October 15, 2022. (Martin Decl., ¶¶ 26-27; Exh. 42 at 2; Exh. 43 at 4; see also Kutcher Decl. ¶ 83.)  In the October 11, 2022, report to the Council, City staff stated:

“Council adoption of this revised Housing Element is necessary to ensure that the City is able to transmit the adopted revised Housing Element to HCD to try and meet the October 15, 2022, State deadline by which HCD must determine that the adopted revised Housing Element complies with State Housing Element Law. If the City meets this deadline, in accordance with Government Code Section 65583.4, which became effective on June 30, 2022, the one-year deadline for rezoning will be extended to three years and 120 days.”  (Resp. Exh. 42 at 2.) 

The staff report also reiterated negative consequences of failure to achieve compliance by the deadline, including “Builder’s Remedy” projects.”  (Resp. Exh. 42 at 3.) 

On July 21, 2022, HLKK filed a preliminary application for a Builder’s Remedy project, based upon HCD’s decision the City’s housing element did not comply with state law.  The project was described as a five-story, 45-unit mixed-use housing development project.  (Resp. Exh. 71; Cola Decl. ¶ 10.)  In early October 2022, City staff prepared a memorandum regarding Builder’s Remedy projects for the City Council.  The memorandum demonstrates from early September 2022 until October 11, 2022, the date the Council ultimately approved the housing element, City received approximately 12 other Builder’s Remedy applications.  (Martin Decl. ¶ 32 and Exh. 41.) 

The development applications would add approximately 3,968 market rate units and approximately 829 affordable units to the City’s housing inventory.  (Martin Decl. ¶ 32 and Exh. 41.) The tallest proposed project would be 15 stories in height.  (Martin Decl. ¶ 32 and Exh. 41.)  City staff attached a letter from HCD to the memorandum that provided a response to the following question: “If a preliminary application is submitted to a jurisdiction without a compliant Housing Element, and the jurisdiction subsequently achieves Housing Element compliance during the project’s entitlement process, do the rights vested by the preliminary application continue to apply?” (Martin Decl. ¶ 32 and Exh. 41.)  HCD answered this question in the affirmative:

“The submittal of a complete preliminary application pursuant to Government Code section 65941.1 vests the right to develop a housing development project in accordance with the ordinances, policies, and standards in effect when a preliminary application is submitted. (Gov. Code § 65589.5, subd. (o)(1).) Therefore, if the submittal occurs at a time when the jurisdiction does not have a compliant housing element, any potential benefits afforded to the applicant as a result of the jurisdiction’s noncompliant status would remain throughout the entitlement process even if the jurisdiction subsequently achieves compliance during the entitlement process.”  (Martin Decl. ¶ 32 and Exh. 41.)  

This evidence shows the City and the Council were motivated to achieve compliance with the State Housing Element Law by October 15, 2022, without regard to Petitioners’ lawsuit.  Significantly, even if the City later achieved compliance, Builder’s Remedy applications submitted after HCD’s finding of non-compliance could potentially become vested. 

The consequences of failure to adopt a compliant housing element by October 15, 2022, including Builder’s Remedy applications, were also discussed at length by the Council at the October 11, 2022 Council meeting.  (Resp. Exh. 63.)  It is clear from the transcript that the councilmembers believed it was important to approve the housing element on October 11 to avoid or limit the penalties imposed for non-compliance with state law, including more Builder’s Remedy applications.  As an example, Councilmember Davis, who made the motion to approve the housing element, stated that he may have voted “no” “if there weren’t these draconian penalties for not adopting this tonight.”  (Resp. Exh. 63 at 24.) 

In addition to the ongoing consultations with HCD, the court finds the statutory consequences of non-compliance with state law motivated the City’s approval of a compliant housing element. 

The City’s Decision Not To Enter Tolling Agreement in March 2022 Does Not Prove the Litigation was a Catalyst 

Petitioners argue they are entitled to fees under Section 1021.5 because the “City could have avoided this lawsuit by entering into an agreement proposed by Petitioners to toll the statute of limitation to challenge the City’s 6th Cycle Housing Element, but the City expressly declined to do so on March 22, 2022.”  (Memo 2:10-12.)  The court disagrees.

At a teleconference with Attorney Kutcher on March 23, 2023, Deputy City Attorney von Tongeln explained “if the City did not gain compliance after making amendments that the City was contemplating, the law would provide an opportunity for SMHC to bring a future claim to compel compliance within 60 days of receiving the HCD’s determination on the revised Housing Element.”  (von Tongeln Decl. ¶ 6 [citing Gov. Code § 65009, subd. (c)(2)].) The City also asserted it “was already actively seeking compliance and would continue to do so irrespective of any potential lawsuit seeking to compel the City to do so.” (von Tongeln Decl. ¶ 6.) For these reasons, the City declined to enter a tolling agreement in March 2022. (von Tongeln Decl. ¶ 6.)

Petitioners fail to respond to Government Code section 65009, subdivision (c)(2) in reply.  (Sehulster Tunnels/Pre-Con v. Traylor Brothers, Inc. (2003) 111 Cal.App.4th 1328, 1345, fn. 16 [failure to address point is “equivalent to a concession”].)  Government Code section 65009, subdivision (c)(2) provides:

“In the case of an action or proceeding challenging the adoption or revision of a housing element pursuant to this subdivision, the action or proceeding may, in addition, be maintained if it is commenced and service is made on the legislative body within 60 days following the date that the Department of Housing and Community Development reports its findings pursuant to subdivision (h) of Section 65585.” 

Pursuant to Government Code section 65509, subdivision (c)(2), if HCD did not approve the June 2022 draft housing element, a tolling agreement would have been unnecessary for Petitioners to proceed with their first cause of action.  Petitioners develop no argument to the contrary.  Thus, City could reasonably decline the tolling agreement for the reasons stated in March 2022.

Moreover, as discussed earlier, the City was involved in ongoing consultations with HCD about the housing element throughout 2022. (Martin Decl. ¶ 20, Exh. 61, and Exh. 62 at 10-11.)  The draft housing element approved by the Council for transmittal to HCD in June 2022 was ultimately approved and certified by HCD.  The evidence demonstrates the City had a reasonable basis to believe it “was already actively seeking compliance and would continue to do so irrespective of any potential lawsuit seeking to compel the City to do so,” as stated by the City Attorney.  (von Tongeln Decl. ¶ 6; see Martin Decl. generally and Exh. 61 and 62 at 10-11.)  For these reasons, the City had reasonable grounds to decline to enter the tolling agreement in March 2022. The City’s decision to decline the tolling agreement, therefore, does not prove the litigation was necessary to obtain City’s compliance with the State Housing Element Law.

On June 17, 2022, a few days before the June 21, 2022 Council meeting, the City and Petitioners entered into the tolling agreement. (Resp. Exh. 68) The milestones in the agreement coincided with the City obtaining a certified housing element by October 15, 2022, including transmittal of the draft housing element to HCD by July 15, 2022, and final adoption of the amended housing element by October 15, 2022. (Resp. Exh. 68; Cola Decl. ¶¶ 6, 7.)  The City complied with the negotiated milestones. The City’s decision to enter the tolling agreement on June 17, 2022, shortly before the June 21, 2022 Council hearing, also does not demonstrate the litigation was necessary to obtain the City’s compliance with the State Housing Element Law.

Generalized Comments About Litigation Risk and the Council’s Change in Votes at June 21, 2022 Meeting Do Not Prove the Litigation Was a Catalyst

Petitioners assert the various references by the Council to litigation risk and lawsuits shows this litigation was a catalyst for City’s approval of a compliant housing element.  The court is not persuaded.

In particular, Petitioners cite the Mayor’s statement at the June 21, 2022 meeting, after the first vote failed. She stated: “We have two choices: we either do this or we sue. And we’re going to get sued. You know there are lawsuits.”  (Memo 7:10-11 [citing Pet. Exh. AA at 7 [emphasis added].)  Petitioners interpret the emphasized statement as referring to Petitioners’ lawsuit and contend that only after the Mayor referred to this lawsuit “did the City Council change course and vote 6-1 in favor of submitting the Draft Amended Housing Element to HCD for review.”  (Memo 7:12-13.)  The Mayor’s statement “you know there are lawsuits” was extremely vague.   She did not explicitly name Petitioners’ lawsuit or discuss any specific details about any lawsuits.  Given the vague nature of the statement and the lack of discussion by the Council, the court cannot infer from the statement the Council acted in response to Petitioners’ litigation. 

Moreover, Petitioners fail to provide the full context for the Council’s second vote on June 21, 2022.  As set forth above, the Mayor invited the councilmembers who voted “no” to explain their reasoning and “what are we going to direct staff to do?”  (Resp. Exh. 64 at 4.)  Councilmembers who voted “no” then explained the reasons for their “no” votes.  (Resp. Exh. 64 at 4-10; see Exh. 37 at 6 [summary of explanations for “no” votes].)  Thereafter, City staff explained how “we’ve been doing this for 2 ½ years” and that “the redlines we’re presenting to you tonight are the results of consultations with HCD.”  (Resp. Exh. 62 at 10-11.)  Staff explained how a “yes” vote on the draft housing element “keeps it on the table and nothing prevents us from continuing to advocate through our lobbyists.”  (Resp. Exh. 62 at 12-13.)  All of this discussion and deliberation came between the Mayor’s vague reference to “lawsuits” and the Council’s final vote.  Given the totality of the circumstances, the evidence does not preponderate that Petitioners’ litigation substantially contributed to the final vote at the June 21, 2022 Council meeting.[5]

Petitioners assert the “new Mayor” referenced litigation risk at a Council meeting on March 21, 2023.  (Memo 7:15-26.)  However, the Mayor made the statements after HCD certified the housing element on October 14, 2022, and after Petitioners acknowledged, at the trial setting conference on October 21, 2022 that the first and second causes of action were moot.  (Resp. Exh. 48.)  The Mayor also did not specifically mention this litigation, and Petitioners provide no context for the Mayor’s statements.  (See Pet. Exh. BB.)  The Mayor’s statements on March 21, 2023 also do not support Petitioners’ theory of causation.

Petitioners’ Pre-Litigation Actions and Comparisons of Petitioners’ and HCD’s Comments on the City’s Draft Housing Elements Do Not Demonstrate the Litigation was a Catalyst

Petitioners assert their “advocacy was a catalyst for HCD’s deficiency findings” and that HCD’s findings of noncompliance “mirror” concerns expressed by Petitioners.  (Memo 6:14, 22-23.)  As support, Petitioners cite their comment letter to HCD dated November 22, 2021 and HCD’s letter to the City dated February 8, 2022. (Pet. Exh. T, B.)  Both letters predate Petitioners’ proposal of a tolling agreement in March 2022 and filing of this writ litigation in April 2022.  Under the catalyst theory, the litigation must substantially contribute to the result obtained. 

Petitioners cite no authority suggesting their pre-litigation comments, standing alone, can demonstrate a causal connection between a subsequently filed lawsuit and the City’s actions. If Petitioners had not filed the lawsuit, and only commented in November 2021 or at other times, they would not be entitled to attorneys’ fees related to such comments. Indeed, Petitioners do not seek attorney’s fees for “prelitigation work” prior to March 1, 2022.  (Mot. 14-15.)

While somewhat unclear, Petitioners may assert that Wallace v. Consumers Coop. of Berkeley, Inc. (1985) 170 Cal.App.3d 836, 847-48 [Wallace] supports a conclusion that prelitigation advocacy in an administrative proceeding can prove the causal element of the catalyst theory.  (See Memo 2:8-14 and fn. 2; Reply 5-6.)  Wallace stands for the rule that, for purposes of calculating the reasonable “lodestar” fee, “hours reasonably expended on an action may include services performed in closely related” or “intertwined inextricably” with underlying administrative proceedings.  (Wallace, supra, 170 Cal.App.3d at 847-849.)  Here, the issue is not whether Petitioners’ work in pre-litigation or post-litigation administrative proceedings could be compensable if Petitioners proved all elements of Section 1021.5.  Wallace did not consider the relevance of prelitigation administrative proceedings to a determination of whether the litigation was a catalyst for an agency’s actions.[6]  “An opinion is not authority for propositions not considered.’”  (People v. Knoller (2007) 41 Cal.4th 139, 154-55.)

Further, to the extent Petitioners’ advocacy in the administrative proceedings has relevance to the causation issue—both pre- and post-filing of the litigation—Petitioners do not meet their burden of proof.  The City’s preparation of a compliant housing element benefited from public comments from many interested parties other than Petitioners, including housing advocacy groups, researchers, developers, and residents. (See e.g., Resp. Exh. 2, 4, 27-28, 36, 44-45, 53.)  Petitioners do not address this significant evidence.  Moreover, Petitioners provide no persuasive analysis in their briefs of the comments received by HCD and the City with respect to the draft housing element.  (See Memo 6-7.)  Petitioners have not developed an argument that, had Petitioners not filed the lawsuit or made certain administrative comments, HCD would not have made the comments it made regarding the City’s compliance with state law, including in the ongoing consultations between the City and HCD discussed above. 

In their petition, Petitioners state: “Consistent with HCD’s findings, Petitioners assert[ed] and allege[d] that the City’s adopted Housing Element violates the substantive requirements of State Housing Element Law in the following respects: A. Suitable Sites Inventory . . . B. Analysis and Mitigation/Removal of Governmental Constraints . . . [and] C. Housing Element Programs.”  (Pet. ¶ 47 [emphasis added].)  Thus, the petition acknowledges, to some degree, Petitioners’ comments and HCD’s comments overlapped.  The court cannot find on this record that HCD—mandated by statute to determine compliance with state law—would not have made its comments if Petitioners had not filed their litigation or engaged in “inextricably intertwined” administrative advocacy. 

In his lengthy declaration, dated June 30, 2023, Attorney Kutcher states the following:

43. Consistent with the Adopted Housing Element’s timetables for implementation of Programs 1.F and 1.J, on January 28, 2022, the City published redlines of proposed amendments to its Land Use and Circulation Element, Bergamot Area Plan, Downtown Community Plan and Zoning Ordinance for a February 2 Planning Commission hearing. . . .

44. The February 2 hearing on the redlines was postponed before it started. . . . The postponement happened because there was too much written material to review and digest between publication of the redlines on Friday, January 28 and the scheduled hearing on Wednesday, February 2nd. But the publication of those February 2, 2022 redlines provides a key basis of comparison by which to measure the significant and important improvements to encourage housing production that were achieved after (A) the HCD determination on February 8, 2022 that the Adopted Housing Element did not pass legal muster and (B) the filing of this lawsuit.

45. To show the tremendous progress that was made between February 2, 2022, and today, I have prepared several documents. One is a chart comparing side-by-side the heights and FARs for housing in nonresidential districts for three time periods: (i) before the 6th Cycle Housing Element, (ii) as contemplated in the February 2, 2022 redlines and (iii) as ultimately adopted, leading to the Petitioners’ voluntary dismissal of all causes of action in this litigation because the objectives of the litigation had been achieved. A copy of the chart is filed concurrently herewith as Exhibit Y and incorporated by reference herein. The second is an electronically generated redline comparison showing differences between the Zoning Ordinance as proposed on February 2, 2022, and the Zoning Ordinance as it exists today now that the litigation has been resolved. My office prepared this redline under my supervision. A copy of the redline is filed concurrently herewith as Exhibit Z and incorporated by reference herein. Both the chart and the redline show the major improvements to facilitate housing production in the nonresidential zones that were accomplished following the filing of SMHC’s lawsuit. (Kutcher Decl. ¶¶ 43-45.)

Petitioners do not mention this evidence in their briefing as to the petition’s first cause of action. While they mention Exhibit Y briefly with respect to the second cause of action, there is no analysis of the evidence in the Opening Brief.  (Memo 4:17-18.)  Further, as described in the declaration, the charts merely show the “progress” made after HCD issued its determination of non-compliance on February 8, 2022.  For reasons discussed earlier, that progress is explained by the City’s ongoing consultations with HCD, the statutory consequences of failure to adopt a compliant housing element by October 15, 2022, and other factors, such as changes in the policy views of councilmembers and their constituents. 

              Kennedy is Distinguishable

Petitioners rely substantially on Kennedy, supra, 91 Cal. App. 5th 436 to support their claim for fees under the catalyst theory.  Kennedy is distinguishable in important ways.  Most significantly, the Court of Appeal reviewed a factual finding by the trial court that the objector’s litigation was a catalyst for the city’s actions.  In its discussion of the standard of review, the Court of Appeal noted: “The trial judge is considered to be in the best position to determine whether the criteria have been met, and its determinations will not be disturbed ‘unless the appellate court is convinced that it is clearly wrong.’ ”  (Id. at 456-457.)  The Court’s discussion of the trial court’s catalyst finding must be read in light of that deferential standard of review.  Furthermore, in Kennedy, the city had a compliant housing element and took affirmative actions to amend a specific plan in a manner that arguably conflicted with the housing element.  (Id. at 444, 457.)  The city’s conduct led to various legal actions, extensive briefing on the merits, appeals, state law amendments, and, eventually, enforcement actions by HCD.  (Id. at 445-448, 457-460.)[7]  The circumstances of Kennedy are not comparable to those here.

Based on the foregoing, the evidence does not preponderate that Petitioners’ lawsuit substantially or materially contributed to the City’s adoption of the 6^th Cycle Housing Element certified by HCD.  Based on its review of the evidentiary record and the parties’ legal arguments, the court makes a factual finding that Petitioners’ action was not a substantial or material factor contributing to the City’s actions. The court finds the City would have adopted the final amended housing element even if Petitioners had not filed their lawsuit in April 2022.  Accordingly, Petitioners have not satisfied all elements of the catalyst theory and Section 1021.5 for the first cause of action.  Accordingly, the court does not reach the parties’ remaining contentions related to the first cause of action. 

Petitioners Were Not Successful Parties or Catalysts for the Second Cause of Action

Through their second cause of action, Petitioner sought a writ directing the City “to implement its adopted Housing Element in accordance with the Housing Element’s schedule of actions, including without limitation Programs 1A (without limitation as to parcel size), 1F, 1J and 2D.”  (Pet. Prayer ¶ 2; see also Id. ¶¶ 59-63.)

As discussed earlier, on June 30, 2022, Senate Bill 197 amended the Government Code to add section 65583.4 extending the existing one-year deadline for re-zoning to three years. (Resp. Exh. 57) Under Senate Bill 197, if the City’s housing element was certified by October 15, 2022, the City would have an additional two years to complete upzoning to implement its Housing Element Implementation Program, or until October 15, 2024, rather than October 15, 2022. (Martin Decl., ¶¶ 26-27; Exh. 42 at 2; Exh. 43 at 4.)

Petitioners’ counsel summarizes the effect of the lawsuit on the second cause of action, as follows:

Upon receiving HCD’s certification, the deadline for the City to implement the promised upzoning was extended by Senate Bill 197 (see Gov’t Code § 65583.4). This rendered the Second Cause of Action moot because the Housing Element was no longer out of compliance, but the specific upzoning of heights and FARs for new housing in the nonresidential districts were already committed to in the Amended Housing Element to Petitioners’ satisfaction.  (Kutcher Decl. ¶ 83.)

To the extent Petitioners obtained their litigation objectives for the second cause of action (which the court does not decide), they did so as a result of the City’s adoption of the 6th Cycle Housing Element.  For the reasons discussed earlier, the evidence does not preponderate that Petitioners’ lawsuit substantially or materially contributed to the City’s adoption of the 6th Cycle Housing Element certified by HCD.  The court finds Petitioners’ proceeding was not a substantial or material factor contributing to the City’s actions related to the second cause of action.  Petitioners therefore have not satisfied all elements of the catalyst theory and Section 1021.5 for their second cause of action.  Accordingly, the court does not reach the parties’ remaining contentions related to the second cause of action. 

Were Petitioners Successful Parties or Catalysts for the Third Cause of Action? 

In their third cause of action, Petitioners sought a writ directing the City “to amend and implement its density bonus ordinance in accordance with [SDBL], including without limitation, increasing the maximum available density bonus to 50 [percent] for mixed-income projects, conceding its applicability to Tier 2 housing projects, and adopting timelines for ministerial processing of density bonus applications.”  (Pet. Prayer ¶ 3; see also Pet. ¶¶ 75-83 [alleged deficiencies in City’s compliance with SDBL].) 

Petitioners filed their lawsuit on April 2022.  On October 21, 2022, after the stay of the litigation terminated, the court conducted a trial setting conference.  The court scheduled a hearing on the third cause of action for June 30, 2023 and set a briefing schedule.  On December 1, 2022, the City filed an answer with multiple affirmative defenses.  On March 21, 2023, the Council adopted an ordinance making updates to the City’s density bonus regulations.  (Martin Decl. ¶ 44, Exh. 55.)  This chronology supports a possible inference Petitioners’ lawsuit was a contributing factor to the City’s actions related to the SDBL.

However, in opposition, the City submits evidence the City made these updates in response to clarification in the SDBL provided by Assembly Bill 2334, effective January 1, 2023 as well as technical guidance from HCD.  (Martin Decl. ¶¶ 39-45.)  Petitioners do not persuasively respond to such evidence in their reply brief.  Among other things, Petitioners do not address Assembly Bill 2334 or the technical guidance from HCD cited by the City. 

Based on the evidence and argument, Petitioners have not met their burden of demonstrating their lawsuit was a substantial or material factor contributing to the City’s adoption of the amended density bonus regulations. Thus, Petitioners have not satisfied all elements of the catalyst theory and Section 1021.5 for their third cause of action. Accordingly, the court does not reach the parties’ remaining contentions related to the third cause of action.

CONCLUSION 

Petitioners’ motion for attorneys’ fees is denied.

IT IS SO ORDERED. 

August 25, 2023                                                                                                                              

________________________________ 

Hon. Mitchell Beckloff  

Judge of the Superior Court