United States: Court of Appeal Rules HERO Cannot Save Previously Vacated Rental Units

The Second District Court of Appeal rejected a California Environmental Quality Act challenge to a mitigated negative declaration for a 24-room boutique hotel (the "Project") in Hollywoodians Encouraging Rental Opportunities (HERO) v. City of Los Angeles et al. (2019) ___ Cal.App.5th ____, affirming the City of Los Angeles's approval to convert a vacant former apartment building into the Project. This affirmation, based in part on the holding that the City used the appropriate baseline when analyzing the Project's impacts to housing and population, demonstrates that, while the court declined to do so in this instance, the time is coming for courts to address population displacement, and more specifically affordable housing, as a CEQA-cognizable impact.

The Project site, located in the Hollywood area of the City, is the location of a vacant 18-unit apartment building originally built in 1939. This building, which was subject to the City's Rent Stabilization Ordinance (Los Angeles Municipal Code §§ 151.00 et seq.), was the subject of a 2009-approved mitigated negative declaration for demolition and replacement with a 39-unit residential condominium project.

In July 2013, project applicant filed a notice of intent to withdraw all 18 units from rental housing use pursuant to the Ellis Act (Govt. Code §§ 7060 et seq.),[1] which "prohibits local governments from 'compel[ling] the owner of any residential real property offer, or to continue to offer, accommodations in the property for rent or lease." The City approved the building demolition subsequent to the vacancy of the 18 rental units in October 2013. In early 2014, the project applicant halted its demolition plans due to a lack of financing, terminating the condominium project plans.

In July 2015, the project applicant then submitted application materials for the hotel Project. Pursuant to CEQA, the City prepared an initial study of the Project, which determined the Project would not displace housing units or residents because the apartment units were withdrawn from the rental market in 2013. Additionally, the initial study found that the Project did not meet the City-adopted minimum significance threshold of 25 multi-family units. Therefore, the initial study concluded that no additional analysis was required for the Project's impacts on population and housing.

Subsequent to the Project approvals' successful journey through the City appeals process, HERO filed a writ petition against the City Council's July 2016 final approval. The gravamen of the action, among other claims, was that the City failed to prepare an environmental impact report ("EIR") that analyzed the direct, indirect and cumulative impacts of the Project on housing and population. Specifically, the petition alleged the environmental documentation did not address the impact of Project and similar projects on the supply of rent-stabilized housing and the dislocation of tenants from such housing.

Following the trial court's ruling in favor of the City, the Court of Appeal held the City was not required to address the Project's alleged impact on the loss of rent-stabilized housing units or the displacement of tenants because the property previously had been withdrawn from the rental market pursuant to the Ellis Act. Moreover, the court found that, under CEQA, the City selected an appropriate baseline as it properly applied the general rule that the baseline consists of conditions as they exist at the time the environmental analysis is commenced. The court determined that HERO, when arguing the City's baseline relied on an "unproven hypothetical," posited a "purely speculative" theory that the Project applicant could at some point return the units to the rent-stabilized market and, because of this possibility, was required to implement a baseline that reflected a pre-2013 Ellis Act withdrawal. Lastly, the court found that, because there was no substantial evidence the Project will have an individual potentially significant impact, the City was permitted to conclude the Project would not have cumulative impacts on the supply of rent-stabilized housing in the Hollywood area.

The court's holdings were not without limitations, however. The decision declined to directly address the trial court's determination that HERO failed to identify physical impacts – as opposed to socioeconomic impacts – related to the alleged tenant displacement. While stating it was "mindful of the shortage of affordable housing in the City," the court recognized that the CEQA baseline issue was dispositive and acknowledged that this case was the "confluence of two statutory schemes." The decision hinted that, while the Project did not have housing and population impacts, future discretionary actions that would result in a loss of affordable housing and displacement of persons from available shelter would result in physical CEQA-cognizable impacts on housing, populations and humans, generally.

Footnote

1 See also Small Property Owners of San Francisco Institute v. City and County of San Francisco (2018) 2 Cal.App.5th 77, 85. The statutory scheme provides real property owners "the absolute right to exit the residential rental business. San Francisco Apartment Ass'n v. City and County of San Francisco (2016) 3 Cal.App.5th 463, 477.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
17 Dec 2019, Other, New York, United States

Join us for an evening of networking with friends and colleagues. Celebrate our 2019 accomplishments with delicious cocktails and hors d'oeuvres.

14 Jan 2020, Symposium, Los Angeles, United States

The 2nd Annual VBC Symposium features healthcare sector pioneers that are creating enterprise value by putting the patient first. The U.S. Healthcare System is transforming and the behavioral health sector is rapidly adopting value-based care principles. This complimentary luncheon will cover the following important patient populations:

23 Jan 2020, Other, New York, United States

A View from the Capitol: 2020 Healthcare Policy, Legal and Regulatory Predictions

Join us for a lively discussion with our healthcare lawyers from Washington, D.C., on upcoming developments in healthcare law and policy for 2020.

 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions