DEVELOPMENT Project Verandas decision looms for City Council

A rending of Project Verandas. Courtesy Project Verandas

by Mark McDermott 

The Manhattan Beach City Council will decide Tuesday whether to allow Project Verandas to proceed, or to uphold any or all of the five citizen appeals against the 79-unit apartment complex, inviting an uphill legal fight in hopes of upending state housing law. 

Two council members, Suzanne Hadley, and Joe Franklin, announced their intent to vote against Project Verandas at the August 23 meeting. Mayor Steve Napolitano questioned developer Frank Buckley, at one point asking, “Why are you doing this to my city?” But Napolitano did not announce opposition. 

Hadley said she was ready to fight the state density bonus housing law that has made the project’s size possible, and taken away the City’s discretionary decision-making over its approval. 

“I will only be forced to build this project by a judge,” Hadley said. “I was elected to fight for my residents.” 

Council members Richard Montgomery and Hildy Stern did not indicate how they would vote, but neither appeared swayed by arguments made by the five appellants. Stern expressed support for more housing in the city so residents like her own children might find a way to live in their increasingly expensive hometown, while Montgomery made the successful motion to continue the matter in order for the City Attorney’s office to explore the legal ramifications of rejecting the project.  Montgomery also expressed reluctance to make a decision at midnight after over four hours of council and public discussion. 

“I’m asking for a continuance for two weeks to get our heads back, and give the City Attorney a chance to come back and tell us great information about this —  here’s what other cities have done, here’s what we can do,” Montgomery said. “And then we can go forward from there.” 

City Attorney Quinn Barrow’s initial response, at the last meeting, was that no case had actually gone forward that sued the state of California for its density bonus law. 

“There’s been cases against applicants and cases against cities that they approved [projects] and cases where cities have disapproved them,” Barrow said. “Clearly, there is case law on this topic. I’m just not familiar with any case where the state is the actual defendant.” 

Hadley indicated a willingness to engage in such a lawsuit because she said residents want to fight back over loss of local control.  

“I think we’re getting close. I think there are a lot of cities who maybe don’t have the spare change,” she said. “I’m not saying we do, either. But I’ve spoken with so many residents… and I said, ‘Look, on the one hand, I ran for council to protect our city and fight for our residents. On the other, I’m a frugal mom with an MBA and I think quantitatively. I don’t want to throw away money on sure litigation. I don’t want to waste money on a case that a lot of people say we might lose. And I’ve had a number of residents come up to me since then and say, ‘You know what. Thank you for being cheap with our money. But we want to pay our tax dollars to fight this. This is why we live here.’” 

While the City may or may not pursue legal action against the state, what is certain is that a rejection of Project Verandas will result in multiple lawsuits against the City and open it up to significant financial liability. At least 13 non-profit pro-housing groups have indicated a willingness to fight the City if the Council rejects Project Verandas, and another state law, the Housing Accountability Act (HAA), gives such organizations the right to sue without the involvement or approval of the developers, who are project applicants. 

Much of the opposition to Project Verandas has centered on the density bonus laws, which in exchange for a project including a small amount of low-income housing (six units, in this case) gives developers a right to certain waivers from the otherwise applicable development standards.  The City also has a “precise development plan” approval process it enacted in 2013, which provides for a streamlined approval process in which cities must grant non-discretionary, ministerial approval. Additionally, the precise development plan process makes the project exempt from the California Environmental Protection Act and its environmental impact report requirements.

But housing advocates say that the HAA is equally crucial in understanding the legal peril the City will face should it reject Project Verandas. The law was originally enacted in 1982 and ammended by the state legislature in 2016,  2017 and 2019 to give more teeth to enforcement mechanisms against cities who attempt to defy state housing requirements, particularly for projects that include affordable housing components. The amended HAA mandates that judges award attorneys fees to those groups who successfully sue in defense of such projects, and, in some cases, requires courts to fine cities $10,000 when they fail to legally defend their rejection of an affordable housing development project.

Those new enforcement mechanisms first came to bear in 2018 when the City of San Mateo rejected a 10-unit housing project, even though it met all objective standards set forth by the City. A state appeals court ruled against the City and upheld the constitutionality of the HAA. In doing so, the court referred to the state’s housing crisis, in which California is projected to be 3.5 million housing units short of its needs, and the importance for legislative requirements to be met by cities. 

“The HAA is strong medicine precisely because the Legislature has diagnosed a sick patient,” the decision said.  

The California Renters and Legal Advocacy Fund (CaRLA), the organization that sued and defeated San Mateo, received $450,000 in attorneys fees in that case. San Mateo spent over $1 million defending itself unsuccessfully. CaRLA  is one of the groups that has sent a letter to Manhattan Beach warning that Project Verandas, by law, must be approved. 

CaRLA executive director Dylan Casey, in an interview, said that he believes Manhattan Beach, like San Mateo, would be in violation of HAA should it reject Project Verandas. 

“We’ve brought in six or seven lawsuits to overturn housing denials based on the Housing Accountability Act, and have been pretty successful with that,” Casey said. “So in this case, the situation the City is in is that this is a site that the City Council designated for multifamily housing. They established rules that would allow for exactly this type of project. And because of that, they’re under a legal obligation to abide by their own rules, and approve a project that complies. I know there’s a little bit of local pushback against the density bonus law, because that allows for some waivers of certain local requirements [such as height] that developers are asking for here. But that’s nothing new. That law is really designed to get below market rate units built, which this project is also proposing. So there’s not a lot of wiggle room here for the City.” 

Casey said Manhattan Beach would also become legally vulnerable, should it reject Project Verandas, for not complying with its housing element. This is a plan each city in the state is required to file in which it specifies how it will meet state-mandated housing needs. According to the City’s housing element, approved by the Council earlier this year after much debate, and some delay, the city’s housing needs are 774 new units by 2029. The housing element counts Project Verandas towards meeting those needs. 

“This site is counted as a ‘pipeline project’ in the city’s sixth cycle housing element,” Casey said. “A denial could disrupt the city’s housing element approval process and potentially take them out of compliance. There are a variety of legal consequences tied to this, which would mostly depend on how [the California Department of Housing and Community Development] reacts to the denial.” 

Another of the housing groups closely watching what action the Council takes next week is Californians for Home Ownership (CHO), which has already filed a lawsuit against the City’s housing element. CHO’s current lawsuit contests elements of the housing element, such as the inclusion of the Manhattan Beach Country Club as a site where 149 low-income housing units could be built, when in fact the property was purchased in 2017 by a national chain for $73 million and is thus unlikely to become low-income housing. 

CHO counsel Matt Gelfand said Project Verandas reminds him of 49-unit development in Huntington Beach the the City rejected even though it conformed with the standards set by the city. His organization, along with two other non-profits, including CaRLA, sued the City of Huntington Beach successfully and received over $600,000 in attorneys fees. The point, Gelfand said, is not to punish cities —  CHO actually defends cities who are sued for approving zoning-compliant projects —  but to ensure that the rules City’s adopt are abided. 

“In this case, it’s a mixed income project that is a ministerial approval project,” Gelfand said. “It’s important for us to identify places where those projects might get denied and push back as strongly as we can against them. Because we need to get over this hurdle, where this kind of approval is surprising to the public and to the City Council. I think it did surprise people that a project could be approved without going through a convoluted CEQA process. The City really should not have this form of appeals option for ministerial approval projects —  it’s just very awkward, and you end up with a real problem. So for us, it’s about making sure everybody understands that if you create rules, like the rules the City of Manhattan Beach created…You have to actually let people build stuff consistent with those rules. The whole plan, everything, is useless if you don’t actually let people build.” 

Gelfand said that while the density bonus law is an important component of Project Verandas, the law that will come to bear should the council reject it will be HAA. 

“This law is designed to create slam dunks for folks like myself,” he said. “That is the point —  to make it very difficult to reject zoning compliant projects.” 

Huntington Beach, in defending its rejection of a zoning compliant project, at the last moment unsuccessfully mounted a public health, and safety, and environmental argument. A similar argument has been made by one of the appellants of Project Verandas, attorney Andrew Ryan, who owns adjacent property. He, along with former councilperson and current council candidate Mark Burton, argued that Project Veranda’s proximity to the Chevron oil refinery exempt it from density bonus laws, but said even those laws allow the City to reject the project over public health concerns. 

“Going into more of the police powers that you guys carry over this project, the density bonus laws talk about the preponderance of the evidence and looking at it and balancing to a 50.1 percent or greater probability, whether or not this project will have an adverse effect on public health and safety,” Ryan told the council. “In my line of work, preponderance of the evidence is 50.1 percent or greater chance of that happening. But in your evaluation of this, that is a discretionary action.” 

Gelfand said such an argument, like that made in Huntington Beach, is “exceedingly unlikely” to hold up in any court. 

“To me, it sounds like a bad faith effort to use the safety of the people who would get to live in this building, including in a few affordable units, to justify keeping them out of the neighborhood,” Gelfand said. “Maybe the person who’s presenting the idea believes it, but it seems unlikely to satisfy the state law standards.” 

Casey, from CaRLA, said such arguments are frequently raised by project opponents both because they get the public’s attention and are difficult to refute.  

“In looking at the record, it appears the developer has done pretty extensive testing and nothing shows up,” Casey said. “And also, just in terms of the suitability of housing in that area, it seems like the refinery is basically surrounded by single family homes now.  It doesn’t appear anyone has raised issues with that. It’s not like this is an industrial area with no other housing in it.” 

Developer Frank Buckley, in an interview, expressed some frustration that a state-certified hydrologist who had produced a 28-page report addressing environmental concerns was given only minutes to speak at City Council. 

“We had one of the leading environmental consultants in the state prepared to speak and refute all the false environmental claims,” Buckley said. “For whatever reason, he was cut off and not given adequate time to get through his 28-page presentation.  Seems a bit peculiar that the City Council wouldn’t see the benefit in hearing from the experts, and understanding the facts to be better informed.” 

That expert, Timothy Wood, oversaw extensive drilling tests and examined Chevron’s own records. 

“He’s literally one of the best in the state,” Buckley said. “He’s brought in by all the big firms, and I called him when we were buying the property. We wouldn’t have bought the property if it had issues. So we brought him in early and asked, ‘Is this something we can build on?’ And he said, ‘Absolutely, 100 percent.”

While HAA looms largest in any possible legal battles, the density bonus law, or more specifically how cities have complied with its requirements, has indirectly been challenged in recent court cases. In one of those cases, a homeowners association sued the City of San Diego over a 214 unit housing development project, which included 18 lower-income units. The homeowners association made similar arguments as those being made by Project Verandas opponents, particularly that the project did not fit in with the rest of the neighborhood. A state appeals court, referencing both HAA and the court’s opinion CaRLA’s case versus San Mateo, upheld San Diego’s approval. 

Buckley said he has not engaged with a majority of the housing advocacy groups because he did not want to be adversarial with the City, nor did he want to encourage the groups to do so. But he expressed confidence in his project’s legal standing. 

“Anyone who really does the diligence to understand knows the fate of cities that tried to uphold these appeals, and  recognizes that no city has prevailed to date,” he said. “The case law is very much in favor of the developer in this, and this legislation is written so binary. This is where the City Council is getting a bad rap, because there’s this impression that they somehow through their housing elements, and their wordsmithing of the [General Plan] and the [Local Coastal Plan], and the various different layers of agencies that we need to comply with —  that they somehow put the City in this vulnerable position. It is not true. What put the City in this position is the state legislation, and the city to their credit, and to Quinn Barrow’s credit, codified that language to the tee. They did a perfect job.” 

Buckley indicated he would fight a rejection of the project in the courts and that Project Verandas will be built, and that it will be built as proposed. He pushed back strongly on the idea that its four stories are out of place. One story is largely subterranean, and its overall massing and from-the-street height is not unlike any number of homes built on sloping hills in the Sand Section of Manhattan Beach. He suggested anyone who has traffic concerns to stand anywhere along Catalina Avenue in Redondo Beach, where there are much larger residential developments and minimal traffic impacts. 

Buckley said that the dishonesty of some of the attacks have surprised him, particularly those made by Burton, which suggested the project site has been owned by Chevron and used for oil and gas drilling in the past and allegations that groundwater would be impacted. All such claims were scientifically refuted by the project’s environmental consultant and report.  But he’s also been surprised at how many people have come out in support of the project because they recognize a real need for more housing in the city. 

“It’s hard to get people to come out and support housing at any level,” Buckley said. “But it’s not hard to get people to come out and voice their opposition to what they believe is a public hazard or a health and safety issue. And we’re faced with a situation where people are shouting ‘Fire!’ in a theater and no one stops to look at the film credits. When someone screams fire, they just run, and that’s what’s going on. And despite my efforts to reach out to everyone and correct misinformation, it still feels like I’m just fighting with my hands tied behind my back.” 

Redondo Beach Mayor Bill Brand, a sharp critic of overdevelopment who has co-authored what he believes is a more rational, and effective approach to cities’ loss of local control than largely ineffective lawsuits —  a statewide citizens’ “Community Zoning” initiative that he and others hope to place on the ballot in 2024. 

“What the state is trying to do is take away communities’ abilities to decide the zoning of their own towns,” Brand said. “The best solution is a statewide initiative approved by California voters to make zoning and land use local affairs. Local governments are best suited to decide how and where to put housing.” ER 


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