Court: S.J. must abide by Surplus Land Act

Land to be disposed of has to be considered for subsidized housing

San Jose and 120 other charter cities must follow a state law that reserves surplus public land for affordable housing, a California appellate court has found — a ruling that could have broad implications in the ongoing battle between legislators pushing statewide housing fixes and city officials fighting to retain local control.

The 6th District Court of Appeal found San Jose must abide by the state Surplus Land Act, which dictates that when a California municipality has land it wants to dispose of, it must offer up that property for subsidized housing affordable to low- and moderate-income residents. Arguing its status as a charter city exempted San Jose from

that state oversight, city officials had been abiding by their own looser version of the rule. But on Tuesday evening, the appellate court determined that no longer will fly.

“We find that the state can require a charter city to prioritize surplus cityowned land for affordable housing development and subject a charter city to restrictions in the manner of disposal of that land, because the shortage of sites available for affordable housing development is a matter of statewide concern,” Justice Eugene Premo wrote in a unanimous opinion.

San Jose City Attorney Richard Doyle was out of the office Wednesday and was not immediately available to comment.

Tuesday’s ruling could have broader implications for other state measures, said some housing law experts. As California’s housing crisis becomes a growing concern, the Legislature has ramped up efforts to force cities to produce more units. But some local officials oppose the new laws, which they say strip their ability to control what gets built in their city. Though Tuesday’s decision applies only to the Surplus Land Act, it still provides a road map to defend other state housing laws against similar challenges by charter cities, said Oaklandbased land-use attorney Todd Williams.

“I think it is helpful in reinforcing the idea that it is proper for the legislature to identify the shortage of housing as an issue of statewide concern,” he said, “and to apply protective measures to all cities including charter cities.”

Charter cities like San Jose, San Francisco, Oakland and several others in the Bay Area have extra authority to govern their own municipal affairs that cities without a charter do not. According to the California Constitution, laws adopted by charter cities generally trump state laws. That led San Jose officials to argue that their local authority governs the disposition of surplus city land — not the state Surplus Land Act.

As nearly half of California’s

“We find that the state can require a charter city to prioritize surplus city-owned land for affordable housing development and subject a charter city to restrictions in the manner of disposal of that land, because the shortage of sites available for affordable housing development is a matter of statewide concern.”

— Justice Eugene Premo wrote in a unanimous opinion

population lives in a charter city, Tuesday’s ruling likely will have farreaching implications.

The Surplus Land Act requires local agencies to offer land they no longer need to a developer that will turn it into a residential project where 25% of the units will be affordable housing for at least 55 years. If no such deal can be reached, the local municipality may list the land on the open market with the condition that if the land is used to build 10 or more homes, at least 15 percent of those units must be affordable.

After the Surplus Land Act was amended in 2014, San Jose adopted its own policy that also reserved excess land for affordable housing but differed from the state law in several key ways. Among those differences, the San Jose policy allowed the City Council to exempt certain properties from the rules on a case-by-case basis, and allowed developers to list “affordable” for-sale units at higher prices than the state law. In addition, land that would be turned into high-rise rental developments in downtown San Jose was exempt from the affordability requirements for five years.

In 2016, affordable housing nonprofits Urban Habitat Program and Housing California, as well as low-income San Jose residents Sarah Anderson and Joana Cruz, sued the city in Santa Clara County Superior Court, claiming the policy flouted state law and would result in a reduction of available affordable housing. The judge sided with the city. The nonprofits, Anderson and Cruz appealed.

The League of California Cities weighed in on the appellate case, arguing for local control.

“The League does not dispute that affordable housing is an important concern,” the league wrote in a brief filed with the court. “But that does not justify denying the City its constitutional home rule authority regarding how that concern should be addressed in connection with the City’s sale of its own surplus property.”

On Tuesday, the appellate court overturned the lower court’s ruling. The justices found that because the shortage of affordable housing impacts the entire state, the California law trumps San Jose’s policy.

Dylan Casey, executive director of the California Renters Legal Advocacy and Education Fund, which filed a similar lawsuit against the city of San Mateo last year, called Tuesday’s ruling “a really big deal.”

After the San Mateo City Council denied a developer’s proposal to build 10 homes on W. Santa Inez Avenue, CaRLA sued, claiming the city had to approve the project under the state Housing Accountability Act. Earlier this month, a San Mateo County Superior Court judge sided with the city, ruling because San Mateo is a charter city, it has the authority to approve or deny the housing project — and the state act is unenforceable.

Casey and his team have requested a new trial. If the request is denied, they will consider appealing the original ruling. Tuesday’s opinion could help sway them toward appealing, Casey said.

“The ruling really supports our position about the HAA, I think,” he said, “and supports the idea that housing is very clearly a matter of statewide concern.”