REAL ESTATE NEWS

As California courts uphold builder’s remedy, the fast-track housing project approval process the state has imposed on cities that fail to adopt state-approved housing plans, more cities are trying to meet developers in the middle.

The model for a negotiated solution to builder’s remedy applications was established by Santa Monica, which opted in 2023 to resolve a bevy of these types of cases by granting speedy approvals in exchange for an agreement from the developers to downsize their projects.

Beverly Hills, which has pending applications for at least 13 builder’s remedy projects ranging in height from eight to 20 stories and encompassing more than 1,300 units, is moving forward on a solution along the lines of the Santa Monica model.

The Beverly Hills City Council directed its staff to develop an ordinance that would create a ministerial, nondiscretionary approval process for builder’s remedy projects that are revised to meet its criteria, including having a building height cap of 85 feet, about seven or eight stories.

Five of the builder’s remedy applications pending in the city are for apartment buildings 19 stories or taller, including a 19 floor project planned for 145 S. Rodeo Drive on the city’s upscale retail corridor.

Facing a statewide housing crisis, California’s state housing agency in 2022 began enforcing in southern cities without state-approved eight-year housing plans a 35-year-old law that overrides local zoning restrictions for builder remedy projects that include a certain amount of affordable housing. The following year, enforcement of builder’s remedy began in Northern California.

WS Communities, which submitted 14 builder’s remedy projects in Santa Monica, reached an agreement with the city to resubmit and downsize its developments in 2023.

Beverly Hills tried and failed three times to gain certification for its housing element plan before securing approval from the state housing agency in March 2024. Until December of last year, the city blocked builder’s remedy projects by telling developers they had to apply for discretionary approvals such as a general plan amendment and a zone change.

Cities that block those types of plans are facing an uphill legal battle in court cases filed by developers that have seen state Attorney General Rob Bonta and housing advocate groups back the plaintiffs.

In December, Beverly Hills adopted a new strategy aimed at compromising with developers who have builder’s remedy applications pending with the city, Urbanize L.A. reported.

In December and January, Beverly Hills deemed that multiple builder’s remedy applications were completed, including for a 14-story, 116-unit mixed-use building with a 60-room hotel at 9229 Wilshire Boulevard; a 20-story, 200-unit tower at 8844 Burton Way; and a 12-story, 65-unit development at 346 N. Maple Drive.

Beverly Hills is hoping it can deal with the balance of its pending builder’s remedy projects with the proposed ordinance for a streamlined approval process for projects that conform to height limits. The city’s Planning Commission is reviewing the proposal this week.

Earlier this month, the city of La Cañada Flintridge threw in the towel in a court battle over a builder’s remedy project.

Cedar Street Partners sued the city after it denied the developer’s builder’s remedy application to build a five-story apartment building at the former First Church of Christ Scientist at 600 Foothill Boulevard.

The project was planned to include 80 apartments, including 16 units reserved for low-income households, 14 hotel rooms and 7,300 square feet of office space.

La Cañada Flintridge’s housing element plan didn’t win state approval until more than two years after Southern California’s October 2021 deadline, but the city denied Cedar Street’s application, which was filed in November 2022, claiming that it’s housing plan was “substantially compliant” with state law before the developer’s filing.

Prior to the state’s approval of the city’s housing element plan in 2023, the La Cañada Flintridge City Council in an approval an update to its plan and declared the plan retroactively “self-certified,” which it said negated the builder’s remedy application.

In March 2024, a Los Angeles County Superior Court judge ruled that the city could not “self-certify” its housing plan and therefore the rejection of Cedar Street’s project was illegal under state law. The judge said the city would be required to post a $14M bond to appeal the decision.

Earlier this month, the La Cañada Flintridge City Council voted to abandon the appeal of the ruling. “Continuing the lawsuits is no longer in the best interest of the city,” Mayor Mike Davitt said in a statement, the Whittier Daily News reported.

After city manager Daniel Jordan estimated the cost of posting the bond at between $200K and $600K, La Cañada Flintridge said in a statement that “the financial cost associated with the appeals process outweighs the potential outcomes of further litigation.”

According to the California Housing Defense Fund, an affordable housing advocate that joined the developer’s lawsuit, the project at 600 Foothill would be the city’s first new multifamily building in decades and its first low-income housing development.

Source: GlobeSt/ALM