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Cristina Pefia Vazquez, SBN 280762 Rebekah Evenson, SBN 207825 Lisa Newstrom, SBN 257901 Kye Young Kim, SBN 278996 BAY AREA LEGAL AID 4 North Second St., Suite 600 San Jose, CA 95113 Telephone: (408) 283-3700 Facsimile: (408) 283-3750 Email: [email protected]

[email protected] [email protected] [email protected]

9 Attorneys for Petitioners and Plaintiffs SARAH ANDERSON and JOANA CRUZ

10 (additional counsel listed on next page)

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(EN

I SEP 2 3 2016

DAVID H. YAl\flASAKl Chl~I Exl!icllllve 0111cer/Cferk

Superior Courtol CA County of Santa. Cimo ·-----~~~~.~~D:::PUTY

F- Tong-Miller

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THE SUPERIOR COURT OF CALIFORNIA

COUNTY OF SANTA CLARA

15 SARAH ANDERSON, JOANA CRUZ, URBAN HABITAT PROGRAM, and HOUSING

16 CALIFORNIA,

17 Petitioners and Plaintiffs,

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19 CITY OF ~AN JOSE, a governmentat'entity, SAN JOSE CITY COUNCIL, and DOES 1-50

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Respondents and Defendants.

Case No. 16CV297950

Opposition to Demurrer to Verified Petition for Writ of Mandate and Complaint for Declaratory and Injunctive Relief

Date: .Time: Dept.: Judge:

October 18, 2016 9:00 a.m. 6 Hon. Theodore C. Zayner

Opposition to Demurrer to Verified Petition for Writ of Mandate and Complaint for Declaratory and Injunctive Relief Case No.: 16CV297950

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Adrian Percer, SBN 217972 J. Jason Lang, SBN 255642 WEIL, GOTSHAL & MANGES LLP 201 Redwood Shores Parkway Redwood Shores, CA 94065-1134 Telephone: (650) 802-3237 Facsimile: (650) 802-3100 Email: [email protected]

j [email protected]

7 Attorneys for Petitioners and Plaintiffs SARAH ANDERSON, JOANA CRUZ, and URBAN

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Michael Rawson, SBN 95868 Valerie Feldman, SBN 210155 PUBLIC INTEREST LAW PROJECT 449 15th Street, Suite 301 Oakland, CA 94612 Telephone: (510) 891-9794 Facsimile: (510) 891-9727 Email: [email protected]

[email protected]

Attorneys for All Petitioners and Plaintiffs

Samuel Tepperman-Gelfant, SBN 240944 David Zisser, SBN 271108 PUBLIC ADVOCATES INC. 131 Steuart St., Suite 300 San Francisco, CA 94105 Telephone: (415) 431-7430 Facsimile: (415) 431-1048 Email: [email protected]

[email protected]

Attorneys for All Petitioners and Plaintiffs


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TABLE OF CONTENTS

Page(s)

I. INTRODUCTION ...................................................................................................................... 1

II. STATUTORY AND FACTUAL BACKGROUND .................................................................. 2

A. The Surplus Land Act is an Integral Part of the Legislature's Response to the Statewide Concern of Affordable Housing ..................................................................... 2

B. The Surplus Land Act as Amended ............................................................................... .4

C. The City's Policy 7-13 .................................................................................................... 5

III. ARGUMENT .............................................................................................................................. 6

A. The Surplus Land Act Preempts the City's Policy ......................................................... 6

1. The Municipal Affairs Articulated by the City Must Acquiesce to the Act's.Requirements ............................................................................................. 7

2. The City Policy Directly Conflicts with the Surplus Land Act .......................... 8

3. The Act Addresses the Vital Matter of Statewide Concern for the Shortage of Affordable Housing ......................................................................... 8

a. The Statewide Concern is Clear and Well-Articulated ........................... 9

b. The City of Vista Court Found an Absence of a Related Statewide Concern, and, therefore, is Easily Distinguished .................................. 10

4. The Act is Reasonably Related to Alleviating the Shortage of Affordable Housing and Narrowly Tailored Toward that End ........................................... 11

B. Other Causes of Action ................................................................................................. 14

IV. CONCLUSION ....................................................... : ................................................................. 14

-i-Opposition to Demurrer to Verified Petition for Writ of Mandate and Complaint for Declaratory and fujunctive Relief

Case No.: 16CV297950

1 TABLE OF AUTHORITIES

2 Page(s)

3 CASES

4 Amwest Surety Insurance Co. v. Wilson (1995) 11 Cal 4th 1243 ...................................................................................................................... 6

5 Aubry v. Tri-City Hospital Dist.

6 (1992) 2 Cal. 4th 962 ...................................................................................................................... 14

7 Baggett v. Gates , (1982) 32 Cal.3d 128 ...................................................................................................................... 13

8 Bishop v. City of San Jose

9 (1969) 1 Cal.3d 56 ............................................................................................................................ 6

1 o Buena Vista Gardens (1985) 175 Cal. App 3d 289 ....................................................................................................... 3, 11

11 Cal. Bldg. Indus. Ass 'n v. City of San Jose

12 (2015) 61 Cal. 4th 435 ............................................................................................................. passim

13 Cal. Fed Savings & Loan Ass 'n v. City of Los Angeles (1991) 54 ~al. 3d 1 .................................................................................................................. passim

14 City of Los Angeles v. Department of Health

15 (1976) 63 Cal.App.3d 473 ................................................................................................................ 8

16 City of Pasadena v. Charleville (1932) 215 Cal. 384 ........................................................................................................................ 10

17 Crowley Maritime Corp. v. Boston Old Colony Ins. Co.

18 (2008) 158 Cal.App.4th 1061 ......................................................................................................... 14

19 ·Dairy Belle Farms v. Brock (1950) 97 Cal.App.2d 146 .......................................................................................................... 7, 14

20 Fiscal v. City and County of San Francisco

21 (2008) 158 Cal.App.4th 895 ...................................................................................................... : ...... 9

22 Int'l Assn. of Firefighters, Local 230 v. San Jose (2011) 195 Cal.App.4th 1179 ......................................................................................................... 13

23 Jauregui v. City of Palmdale

24 (2014) 226. Cal.App.4th 781 .......................................................................................................... 13

25 Johnson v. Bradley

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(1992) 4 Cal.4th 389 ......................................................................................................................... 7

Professional Fire Fighters, Inc. v. Los Angeles, 60 Cal. 2d 276 (1963) ........................................................................................................................ 8

- ii -Opposition to Demurrer to Verified Petition for Writ of Mandate and Complaint for Declaratory and Injunctive Relief


1 R & A Vending Services, Inc. v. City of Los Angeles (1985) 172 Cal. App. 3d 1188 ........................................................................................................ 10

2 Santa Clara v. Von Raesfeld

3 (1970) 3 Cal.3d 239 .......................................................................................................................... 7

4 Scott v. CIBA Vision Corp. (1995) 38 Cal.App.4th 307 ............................................................................................................. 14

5 State Bldg. & Const. Trades Counsel of Cal., AFL-CIO v. City of Vista

6 (2012) 54 Cal.4th 547 .............................................................................................................. passim

7 Sugarman v. Falk, 2014 Cal. Super. LEXIS 565 ........................................................................ ., ................................ 14

8 Weiss v. City of Los Angeles

9 (2016) 2 Cal.App. 5th 194 .............................................................................................................. 10

10 STATUTES

11 Government Code§ 50569 ..................................................................................................................... 4

12 Government Code §§ 54220 ................................................................................................................... 1

13 Government Code§ 54220 (a) ....................................................................................................... passim

14 Government Code§ 54221 (a) ............................................................................................................. 2, 6

15_ Government Code§ 54222 ................................................................................................................... 12

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Government Code § 54222.5 ........................................................... ( ........................................... 4, 6, 12

Government Code§ 54223 ......................................................................................................... 5, 12, 13

Government Code§ 54226 ....... ~ ............................................................. :·········· ......................... 5, 12, 13

Government Code§ 54227 ............................................................................................................... 5, 12

Government Code§ 54233 ......................................................................................................... 5, 12, 13

Government Code§ 54951 ..................................................................................................................... 4

Government Code§ 65008(g) ................................................................................................................ 4

Government Code§ 65008(h) .......................................................................................................... 3, 14

Government Code§ 65300 ..................................................................................................................... 3

Government Code§ 65580(a) ................................................................................................................. 2

Government Code§ 65580(c) .......................................................... , ...................................................... 2

Government Code§ 65589.4(g) ......................................................................................................... 3, 4

- iii -Opposition to Demurrer to Verified Petition for Writ of Mandate and Complaint for Declaratory and Injunctive Relief


1 Government Code§ 65589.5 .................................................................................................................. 2

2 Government Code§ 65589.5(g) ............................................................................................................. 3

3 Government Code§ 65589.7 .................................................................................................................. 4

4 Government Code§ 65589.7(:£) .............................................................................................................. 3

5 Government Code§ 65852.2(i)(2) .......................................................................................................... 4

6 Government Code§ 65863.10(a)(4) ...................................................................................................... .4

7 Government Code§ 65913.9 .............................................................................................................. 3, 4

8 Government Codes §§. 65580-65589 ...................................................................................................... 2

9 Government Codes§§ 65913.1-65913.9 ................................................................................................ 2

10 Government Codes§§ 65915-65918 ...................................................................................................... 2

11 Health & Safety Code§ 33413 .......................... : .................................................................................. 13

12 ·Health & Safety Code§ 41003 ............................................................................................................... 2

13 Health & Safety Code § 50003 ............................................................................................................... 2

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1 I. INTRODUCTION

2 The City of San Jose ("the City") adopted Policy 7-13 allowing disposition of surplus City land

3 in direct conflict with the Surplus Land Act - the state law requiring all cities to fust offer their surplus

4 property for the development of housing affordable to lower income households. Government Code§§

5 54220 et seq. ("the Act"). 1 The California Supreme Court has laid out a four-part test to determine the

6 applicability of a state statute to charter cities, like San Jose. State Bldg. & Const. Trades Counsel of

7 Cal., AFL-CIO v. City of Vista (2012) 54 Cal. 4th 547, 556 ("City of Vista") quoting Cal. Fed Savings

8 & Loan Ass'n v. City of Los Angeles (1991) 54 Cal. 3d 1, 17. Applying the Supreme Court's test, the

9 Surplus Land Act preempts and overrides the conflicting City Policy 7-13 because the Act addresses a

10 statewide concern and is reasonably related and narrowly tailored. The City's contention in demurrer

11 that it is exempt from complying with state law must be rejected.

12 The Surplus Land Act addresses the affordable housing crisis, a matter of statewide concern.

13 The shortage of affordable housing for lower-income Californians has been a declared subject of

14 statewide concern for more than 35 years. As our Supreme Court recently noted, "the significant

15 problems arising from a scarcity of affordable housing have not been solved over the past three

16 decades. Rather, these problems have become more severe." Cal. Bldg. Indus. Ass'n v. City of San Jose

17 (2015) 61 Cal. 4th 435, 441. In its ongoing effort to address the worsening crisis, the Legislature

18 adopted, and in 2014, strengthened, the Surplus Land Act. The Act is reasonably related and narrowly

19 tailored to address that concern as it requires all cities, charter and general law alike, to frrst offer their

20 surplus property for the development of housing affordable to lower-income households.

21 The City adopted Policy 7-13 that, as it acknowledges, conflicts with the Surplus Land Act and

22 contends that the Act does not apply. But text of the Act specifically states that it applies to charter

23 cities, and this court must presume the constitutionality of this legislative enactment. Where the

24 Legislature has expressly imposed requirements on charter cities, there is a judicial presumption of the

25 constitutional validity of legislative acts and that presumption can be overcome only on a "clear and

26 unquestionable" showing. The City meets neither this demanding standard nor the four-part test.

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28 1 Unless otherwise indicated, all statutory citations are to the California Government Code.

- 1 -Opposition to Demurrer to Verified Petition for Writ of Mandate and Complaint for Declaratory and Injunctive Relief


1 Accordingly, the Act plainly preempts and overrides the City's charter authority, and the demurrer

2 should be overruled.

3 II. STATUTORY AND FACTUAL BACKGROUND

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A. The Surplus Land Act is an Integral Part of the Legislature's Response to the Statewide Concern of Affordable Housing.

The Act is an integral part of the Legislature's policy response to the entrenched and worsening

statewide affordable housing crisis. Like other statutes that are part of this Legislative response, the

Act declares that housing is of vital statewide importance and a priority of the highest order. § 54220

(a). And like those other statutes, the Act explicitly applies its provisions to charter cities. § 54221 (a).

The Legislature declared in 197 5 that "there exists with the urban and rural areas of the state a

serious shortage of decent, safe, and sanitary housing which persons and families of low or moderate

income ... can afford. This situation creates an absolute present and future shortage ... " Cal. Bldg.

Indus. Ass'n., 61 Cal. 4th at 441, quoting Health & Safety Code§ 50003 (initially codified as§ 41003).

This prescient declaration was followed in 1979 by the amendment of the Act to require surplus lands

be made available for low and moderate income housing. Stats. 1979 ch. 942 § 1. A year later, when

adopting the Housing Element Law, the Legislature acted to articulate the state housing goal: "The

availability of housing is of vital statewide importance ... and the early attainment of decent housing

and a suitable living environment for every Californian is a priority of the highest order .... " §

65580(a), (c) [Stats. 1980, ch. 1143 § 3]; Cal. Bldg. Indu. Ass'n, 61 Cal.4th at 444-45.

In pursuit of this highest-priority goal, "the Legislature has enacted a variety of ... statutes to

facilitate and encourage the provision of affordable housing .... " Cal. Bldg. Indus. Ass 'n, 61 Cal. 4th at

445. The Court cited a number of examples: §§ 65580-65589 [Housing Element Law - requiring,

among other actions, each city and 'county to provide adequate sites to meet their housing needs for all

income levels], §§ 65913.1-65913.9 [least cost zoning law- requiring each city and county to remove

zoning restrictions that make residential development for all income levels infeasible], § 65589.5 25 I

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[Housing Accountability Act - requiring all cities to approve affordable housing developments unless

specified findings are made], and §§ 65915-65918 [Density Bonus Law - requiring all cities to grant

minimum development incentives to projects that include affordable housing].

-2-Opposition to Demurrer to Verified Petition for Writ of Mandate and Complaint for Declaratory and Injunctive Relief


1 The Legislature amended the Surplus Land Act in 1982 to incorporate and reaffirm the state

2 housing goal it had set forth in the Housing Element Law:

3 The Legislature reaffirms its declaration that housing is of vital statewide importance to the health, safety, and welfare of the residents of this state and

4 that provision of a decent home and a suitable living environment for every Californian is a priority of the highest order. The Legislature further declares

5 that there is a shortage of sites available for housing for persons and families of low and moderate income and that surplus government land, prior to disposition,

6 should be made available for that purpose.

7 § 54220 (a).

8 The Legislature since has continued to enact and strengthen legislation to directly address this

9 vital statewide concern, and many of these laws also expressly declare the importance of increasing the

10 supply of affordable housing. For instance, the Legislature declared in prohibiting discrimination

11 against affordable housing that " ... discriminatory practices that inhibit the development of housing for

12 persons and families of very low, low, moderate, and middle incomes ... are a matter of statewide

13 concern" (§ 65008(h)); in the Housing Accountability Act that " ... the lack of housing ... is a critical

14 statewide problem" (§ 65589.5(g)); in granting affordable housing sites priority for water and sewer

15 hook-ups, that " ... the lack of affordable housing is a matter of vital statewide importance" (§

16 65589.7(f)); in the least cost zoning law that " ... the development of a sufficient supply of housing to

· 17 meet the needs of all Californians is a matter of statewide concern"(§ 65913.9); in providing for by-

18 right multi-family housing permits that " ... the lack of affordable housing is of vital statewide

19 importance, and thus a matter of statewide concern"(§ 65589.4(g)); and in requiring persons who sue

20 to halt affordable housing to pay attorney fees that "the development of a sufficient supply of housing

21 to meet the needs of all Californians is a matter of statewide concern"(§ 65913.9).

22 Like the Surplus Land Act, these laws also explicitly apply to charter cities. Such express

23 provisions appear in each of the statutes the Supreme Court cited: the Housing Element Law, § 65300

24 ("Chartered cities shall adopt general plans which contain the mandatory elements specified in Section

25 65302"); see also Buena Vista Gardens Apartments Ass'n v. City of San Diego Planning Dep't (1985)

26 175 Cal. App 3d 289, 306-07; least cost zoning law, § 65913.9 ("This chapter shall apply to all cities,

27 including charter cities, counties, and cities and counties."); Housing Accountability Act, §65589.5(g)

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1 ("This section shall be applicable to charter cities .... "); and Density Bonus Law, § 65863.10(a)(4)

2 ('"City' means a general law city, a charter city, or a city and county."). They also appear, for example,

3 in the second dwelling units law, § 65852.2(i)(2) ("'Local agency' means a city, county, or city and

4 county, whether general law or chartered"); in the No-Net-Loss-in Zoning Density law, §

5 65863.10(a)(4) ("'City' means a general law city, a charter city, or a city and county."); in the by-right

6 attached housing law, § 65589.4(g) ("This section is applicable to all cities and counties, including

7 charter cities ... "); in the statute prohibiting discrimination against affordable housing, § 65008(g)

8 ("This section shall apply to chartered cities."); in the statute prioritizing affordable housing for water

9 and sewer hookups, § 65589.7 ("The Legislature finds and declares that this section shall be applicable

10 to all cities and counties, including charter cities .... "); in the statute requiring an inventory of excess

11 land, § 50569, which applies to local agencies as defined in § 54951 ("As used in this chapter, 'local

12 agency' means a county, city, whether general law or chartered, city and county, town ... "); and in the

13 statute requiring persons who sue to halt affordable housing to pay attorney fees, § 65913.9 ("This

14 chapter shall apply to all cities, including charter cities, counties, and cities and counties."), among

15 others.2

16 B. The Surplus Land Act as Amended

17 The Surplus Land Act has required that cities make surplus land available for affordable

18 housing since 1979. Stats. 1979 ch 942 § 1, supra. As amended in 2014 (Stats. 2014, ch. 677), it now

19 includes additional requirements to further its purpose to facilitate the development affordable housing.

20 A local agency disposing of a surplus parcel must now give first priority to an interested entity that

21 proposes to make at least twenty-five (25) percent of the total number of units developed on that parcel

22 affordable to lower-income households. § 54222.5. Notably, the priority for affordable housing

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24 2 The Legislature has also provided funding sources to achieve the statewide affordable housing goal, which are likewise available to both charter and general law cities. The California Department of Housing and Community Development lists

25 more than twenty (20) such funding sources and bond-funded housing programs on its website, and the California Tax Credit Allocation Committee also allocates federal and state housing tax credits. See Cal. DHCD, HCD's Loans, Grants and

26 Enterprise Zone Programs, available at http://www.hcd.ca.gov/financial-assistance/, last visited Sept. 21, 2016; Cal. DHCD, Bond-Funded Housing and Programs Update, available at http://www.hcd.ca.gov/financial-assistance/bonds.html,

27 last visited Sept. 21, 2016; Office of the State Treasurer, Low-Income Housing Tax Credit Programs, available at http://www.treasurer.ca.gov/ctcac/tax.asp, last visited Sept. 21, 2016.

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1 requires the local agency to engage in good faith negotiations with interested affordable housing

2 developers for a period of ninety (90) days. § 54223. The local agency need not, however, sell the land

3 for less than fair market value, and the Act leaves the local agency free to offer the parcel to another

4 purchaser if no agreement on price or terms can be reached during the good faith negotiation period. § §

5 54226, 54233. Should that other purchaser decide to build ten or more residential units on the parcel,

6 the Act requires at least fifteen (15) percent of the units to be affordable to lower-income households

7 (§ 54233), akin to the City's inclusionary policy recently upheld in Cal. Bldg. Indus. Ass'n, supra.

8 The City's brief misrepresents the requirements of the Act in four respects. First, the Act does

9 not "go[] so far as to require the City to offer any surplus land, without consideration whether that use

10 is consistent with the City's general plan." Defendants' Brief at 12 (hereinafter "Def. br."). In fact, the

11 Act does not impinge on local zoning authority in any way, nor does it require the City to rezone

12 surplus property. Second, the Act does not "require the City[] to prioritize affordable housing in every

13 case." Id. at 1. To the contrary, it makes an express exception for land zoned for, or already being used

14 for, park or recreational purposes that are to be maintained for those uses. § 54227. Third, despite what

15 the City implies,. the Act does not require that it sell land at below market value. See Def. br. at 11-12.

16 Indeed, the Act specifically states that it "shall not be interpreted to limit the power of any local agency

17 to sell or lease surplus land [] at less than fair market value." § 54226. Finally, the Act does not

18 "exclud[e] moderate-income individuals in need of affordable housing." Def. br. at 12-13. Instead, it

19 simply prescribes a modest percentage of housing be made available for lower-income residents;

20 where that is met, the City is free to earmark additional units affordable to moderate-income

21 households.

22 c. The City's Policy 7-13

23 As the City admits, Policy 7-13 conflicts with the Act in several key ways. The City Policy

24 exempts downtown high-rise rental developments (through June 30, 2021) from compliance with the

25 set-aside for affordable units mandated under Government Code section 54233. Second, the City

26 Policy prioritizes for-sale units developed by preferred entities on surplus land for moderate-income

27 households, whil.e the Act requires that units be affordable for lower-income households (those

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1 households earning less than 80 percent of Area Median Income ("AMI")). § 54222.5. Third, the City

2 Policy re-defines the Act's affordability targets for home ownership to make them "more attractive to

3 developers" by permitting developers to sell at higher prices than the Act allows. Def. br. at 4.

4 Specifically, the City Policy allows for-sale units in market rate developments "to be affordable to

5 households with incomes at 100 percent of AMI, even including households with incomes at or below

6 120% of AMI." Policy 7-13 at section C(2)(a); Attachment 2 to ~he Petition. Lastly, the City Policy

7 allows city staff to "request an exemption from this policy to meet another City goal and prioritize the

8 sale of surplus property for parks, schools, or other reasons, such as economic development." Id. at

9 section D( 4). The Act allows no such broad discretion.

10 III. ARGUMENT

11 A. The Surplus Land Act Preempts the City's Policy.

12 When a charter city enacts a policy that conflicts with state law, the local policy is preempted

13 by state law so long as "the subject of the state statute is one of statewide concern and ... the statute is

14 reasonably related to its resolution." City of Vista, 54 Cal. 4th at 556 quoting Cal. Fed. Savings & Loan

15 Ass 'n, 54 Cal. 3d at 17 (emphasis added).

16 The plain language of the Surplus Land Act states that the Act applies to charter cities, (§

17 54221(a)), and that it addresses a matter of statewide concern (§ 54220(a)). Like all legislative

18 enactments, the Surplus Land Act carries a strong presumption of constitutional validity,3 and the

19 Legislature's authority to enact its provisions should be resolved in its favor unless a "conflict with a

20 provision of the state or federal Constitution is clear and unquestionable." AmWest Surety Insurance

21 Co. v. Wilson (1995) 11 Cal 4th 1243, 1252. In accordance with this extraordinary deference due to

22 Legislative enactments, California courts have crafted a test for determining when state laws preempt

23 charter city policies that prioritizes the state's interests. Specifically, if the court determines that a) a

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25 3 The City cites Bishop v. City of San Jose (1969) 1 Cal.3d 56, 63 to argue that the Legislature does not have the authority to determine what is a municipal affair nor to transform such an affair into a matter of statewide concern. Def. br. at 6. This

26 principle is not applicable. Here, the Legislature did not attempt to determine what constitutes a municipal affair, nor did it attempt to change a municipal affair into a matter of statewide concern. It merely identified that affordable housing is a

27 statewide concern being addressed by the Act. This Legislative declaration of statewide concern is to be given great weight, not summarily dismissed.

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1 charter city policy implicates a "municipal affair" and b) that there is an actual conflict between the

2 state law and the charter city's policy, then the state law preempts the local policy so long as c) the

3 "subject of the state statute is one of statewide concern" and d) the state statute is "(i) reasonably

4 related to the resolution of that [statewide] concern, and (ii) 'narrowly tailored' to limit incursion into

5 legitimate municipal interests." Johnson v. Bradley (1992) 4 Cal.4th 389, 404; City of Vista, supra, 54

6 Cal. 4th at 556 (quoting Cal. Fed Savings & Loan Ass 'n, 54 Cal. 3d at 17) (emphasis added).

7 Consistent with the strong presumption of validity and heavy burden of demonstrating

8 invalidity of Legislative enactments, any question about the applicability of the Act to charter cities

9 must be resolved against the City, and "any fair, reasonable doubt concerning the existence of the

10 power [to regulate] is resolved by the courts against the municipal corporation ... " Dairy Belle Farms

11 v. Brock (1950) 97 Cal.App.2d 146, 154 (internal quotation marks and citations omitted).

12 As set forth below, the Policy 7-13 is preempted by the state's Surplus Land Act.

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1. The Municipal Affairs Articulated by the City Must Acquiesce to the Act's Requirements.

15 The first step in the analysis is to determine whether a municipal interest is at stake. The only

16 purpose of this first step is to determine whether any further analysis is needed. If there is no municipal

17 interest involved, there is no need to continue the preemption analysis. The City presents a litany of

18 municipal affairs (Def. br. at 6-7), but contrary to the express framework of the test, frames the

19 municipal affairs as absolutes. Even where the City has established that a municipal affair is

20 implicated, however, the Court must still assess whether a statewide concern overrides the municipal

21 affair under the four prong test. See, e.g., Santa Clara v. Von Raesfeld (1970) 3 Cal.3d 239, 246

22 (holding that a state statute appropriately overrode a charter city's authority to issue city revenue

23 bonds).4 Stated differently, if - and only if - "the subject of the statute fails to qualify as one of

24 4 See also City of Los Angeles v. Department of Health (1976) 63 Cal.App.3d 473, 479-81 (holding that although "classical

25 zoning ... may well be a municipal affair," "the location of homes for the placement ofhandicapped persons" is a matter of statewide concern and relevant state law requirements apply with equal force to charter cities.); "[T]here are innumerable

26 authorities holding that general law prevails over local enactments of a chartered city, even in regard to matters which would otherwise be deemed to be strictly municipal affairs, where the subject matter of the general law is of statewide

27 concern." Professional Fire Fighters, Inc. v. Los Angeles, (1963) 60 Cal. 2d 276, 292; see also Cal. Fed Savings & Loan Ass'n, 54Cal.3dat17.

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1 statewide concern, then the conflicting charter city measure is a 'municipal affair'" that is exempt from

2 the state law mandates under article XI section 5(a). Cal Fed Savings & Loan Ass 'n, supra, 54 Cal.3d

3 at 17.

4 2. The City Policy Directly Conflicts with the Surplus Land Act.

5 As the City acknowledges, Policy 7-13 directly conflicts with the Act in each of the four ways

6 Petitioners allege. Def. br. at 7; accord, Pet., if 27. As detailed in Section IL C, above, the Policy (a)

7 exempts particular types of development, (b) prioritizes for-sale units affordable to moderate income

8 households, ( c) permits a sales price that conflicts with the Act's affordability targets, and ( d) allows a

9 complete exemption in certain situations ·while the Act allows no such broad discretion. 5 Given the

10 direct conflict between the City Policy and state law, the second step of the preemption analysis is met.

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3. The Act Addresses the Vital Matter of Statewide Concern for the Shortage of Affordable Housing.

13 With the third prong of this test-whether the statute at issue addresses a matter of statewide

14 concern-we enter the heart of the inquiry: determining the nature of the statewide concern and the

15 relation of the requirements of the statute to resolution of that concern. In this analysis, "the question

16 of statewide concern is the bedrock inquiry through which the conflict between state and local interests

17 is adjusted." Cal. Fed Savings & Loan Ass 'n, supra, 54 Cal. 3d at 17. While the City notes in passing

18 "the importance of identifying correctly the question at issue" (Def. br. at 8, quoting City of Vista,

19 supra, 54 Cal.4th at 561), it concludes, contrary to the clear statements of the Legislature, that "there is

20 no statewide concern" at all that is implicated in the Act. Def. br. at 10. Instead, the City sets up a

21 straw man, wrongly framing the question as whether the City's sale of its own property is a matter of

22 statewide concern. (Id at 8.)

23 The Legislature has made it transparently clear that the shortage of affordable housing for

24 lower-income households is the relevant matter of statewide concern. Moreover, the City's effort to fit

25

26 5 The City also states that "the Policy does not require that affordable housing restrictions be recorded in a covenant at the time the surplus land is sold. (See Attachment 1.)." Def. br. at 4. This is an error because the final version of City Council

27 Policy 7-13 states that the covenant does run with the land. Pet's Attachment 1, section C(4); see also Exhibit A, section M of Attachment 1.

28

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1 this case into the fact pattern of City of Vista is misplaced.

2 a. The Statewide Concern is Clear and Well-Articulated.

3 The Legislature, as explained in Section II.B., has been steadfast over 35 years in declaring the

4 crucial statewide importance of alleviating the shortage of affordable housing. The Act itself reaffirms

5 . that "housing is of vital statewide importance to the health, safety, and welfare of the residents of this

6 state and that provision of a decent home and a suitable living environment for every Californian is a

7 priority of the highest order."§ 54220(a). This statewide concern overrides the City's parochial interest

8 in the disposition of its surplus property in order to achieve the statewide housing goal that the

9 Legislature has declared in the Act and elsewhere to be of "vital statewide importance" and a "priority

10 of the highest order." See Section II(A). The requirements of the Act, giving priority to affordable

11 housing and developers who will sell or rent at least 25% of the units at affordable prices, leaves no

12 doubt that the Act addresses the statewide concern for increasing the supply of affordable housing. The

13 City's own description, in fact, highlights the Act's repeated reference to lower-income housing. Def.

14 br. at 2-3.

15 Applying the requirements of the Act to all cities, including the state's 121 charter cities, 6 as

16 well as all other local agencies, is essential to accomplishing the affordable housing purpose of the Act.

17 "[I]f every city and county were able to opt out of the statutory regime simply by passing a local

18 ordinance, the statewide goal of uniform regulation ... would surely be frustrated." Fiscal v. City and

19 County of San Francisco (2008) 158 Cal.App.4th 895, 919 (local ordinance addressing illegal gun

20 possession was preempted by state law, despite home rule, as the state Penal Code contained a

21 necessary comprehensive uniform scheme). "Clearly, the creation of a uniform regulatory scheme is a

22 matter of statewide concern, which should not be disrupted by permitting this type of contradictory

23 local action." Id The Act, consequently, must, like the other affordable housing statutes, "bind equally

24 on both charter and general law cities" to accomplish its purpose. City of Los Angeles, 63 Cal.App.3d

25 at 48.

26

27

28

6 League of California Cities, Charter Cities List, available at http://www.cacities.org/Resources-Documents/ResourcesSection/Charter-Cities/Charter _Cities-List, last visited Sep 21, 2016.



1

2

b. The City of Vista Court Found an Absence of a Related Statewide Concern, and, therefore, is Easily Distinguished.

3 The City relies too heavily on the holding of City of Vista, supra, 54 Cal.4th 547. While the

4 City of Vista is relevant and the legal principles are generally applicable, the facts of that case are

5 materially distinguishable7 in key respects that dictate a different outcome in this case. Most saliently,

6 City of Vista addressed a subject which the courts had long held did not involve a matter of statewide

7 concern. Here, in contrast, the Surplus Land Act addresses a matter that both the Legislature and the

8 courts have long agreed to be one of statewide concern. This distinction places this case in a

9 completely distinct constitutional posture.

10 Specifically, the City of Vista court examined a statute setting prevailing wages for contractors

11 constructing public works projects. The Court held that wage levels of local government contractors

12 are not a matter of state concern. City of Vista, 54 Cal.4th at 560. Its decision that the statute did not

13 apply to charter cities was grounded in a long but narrow line of cases dating back to City of Pasadena

14 v. Charleville (1932) 215 Cal. 384. In that context, the Court noted that the wages paid by municipal

15 contractors at issue in the case had not been the province of state concern and could not be justified by

16 "merely ... some indirect effect on the regional and state economies." City of Vista, supra, 54 Cal.4th

17 at 562 (emphasis added). 8

18 The City overstates the holding in City of Vista. The state law at issue in City of Vista regulated

19 the wages of specific workers, for specific projects within the city's boundaries and in that context, the

20 statewide concern was abstract. City of Vista, supra, 54 Cal.4th at 564. The City emphasizes that in

21

22

23

24

25

26

27

28

7 The City also cites Weiss v. City of Los Angeles (2016) 2 Cal.App. 5th 194, 216-17 and R & A Vending Services, Inc. v. City of Los Angeles (1985) 172 Cal. App. 3d 1188 for the proposition that they are exempt from general law with respect to municipal affairs. These cases are distinguishable. The court in Weiss found that home rule did not apply because the conflict with the state law arose between a city contract with a parking processing agency, not a legislative act by the City. Therefore, the court did not apply the four-prong test. Weiss, 2 Cal.App. 5th at 216-17. The court in R & A Vending Services found that"[ d]eciding who will be awarded the contract for refreshment stands in a city park is unquestionably a matter of municipal concern." 172 Cal. App. 3d at 1192. This case is distinguishable because (1) the effects of the sales and revenue from a refreshment stand in a city park do not have a regional effect; (2) the implementation of affordable housing requirements on the disposition of charter city lands have been readily established by the courts as a valid statewide concern that can trump a municipal city interest; and (3) this case pre-dates the City of Vista four prong test first established by the Supreme Court in 1991 in Cal. Fed Savings & LoanAss'n., supra. 8 And subsequent to the City of Vista decision, the Legislature adopted Labor Code § 1782 effectively overturning the decision.



1 City of Vista, the state-required prevailing wages were for jobs where "the construction of a city-

2 operated facility for the benefit of a city's inhabitants is quintessentially a municipal affair." Def. br. at

3 6-7 citing City of Vista, 54 Cal.4th at 559 (emphasis in original). Whereas the Surplus Land Act

4 addresses an unquestionable matter of statewide concern, "the state has a more substantial interest in

5 the subject than the charter city." Cal. Fed Savings & Loan Ass'n, supra, 54 Cal.3d at 18; see also

6 City of Vista, supra, 54 Cal.4th at 558.

7 In contrast, the Act addresses a matter the Legislature and the courts have long found to be one

8 of statewide concern. The courts likewise have consistently concluded that the state's chronic epidemic

9 of affordable housing scarcity is a vital subject of statewide concern. E.g., Buena Vista Gardens,

10 supra, 175 Cal. App 3d at 306-307 ("The judiciary has likewise found the need to provide adequate

11 housing to be a matter of statewide concern") (citations omitted); see also Cal. Bldg. Indus. Ass 'n,

12 supra, 61 Cal. 4th at 441 (the scarcity of affordable housing is a crisis of "epic proportions.").

13 The City's contention that the application of the four-prong test should end at step three

14 because "[t]he City's sale of its own property is not a statewide concern" (Def. br. at 8) demonstrates

15 nothing more than the City's failure to engage step three of the test and is without merit. The Act

16 explicitly and emphatically addresses a matter of statewide concern and the City has not overcome the

17 presumptive constitutionality of legislative acts by a "clear and unquestionable" showing.

18

19

4. The Act is Reasonably Related to Alleviating the Shortage of Affordable Housing and Narrowly Tailored Toward that End.

20 The application of the Act to charter cities must be upheld if it "is reasonably related to [the]

21 resolution" of that subject of statewide concern. City of Vista, 54 Cal. 4th at 556 (quoting Cal. Fed

22 Savings & Loan Ass 'n, 54 Cal. 3d at 17). There is no question that the Act is directly and reasonably

23 related to its purpose of addressing the affordable housing crisis by increasing the supply of sites

24 available for affordable housing development in San Jose and throughout the state. Its requirements

25 help address the "shortage of sites available for [affordable] housing" by requiring "surplus

26 government land, prior to disposition, to be made available for that purpose."§ 54220(a). For example,

27 it requires that affordable housing developers be given first priority to negotiate for the land (§

28



1 54222.5) and prioritizes proposals that include the most amount of affordable housing at the deepest

2 levels of affordability. § 54227. The requirement that 15% of units in market-rate developments of ten

3 or more units must be affordable (§ 54233) also clearly advances the statewide interest in housing

4 affordability, and is similar to the City's own inclusionary policy upheld in Cal. Bldg. Indus. Ass'n,

5 supra, 61 Cal. 4th 435.

6 The Act is also narrowly tailored to address the statewide concern for affordable housing. It

7 establishes a specific set of requirements to prioritize affordable housing on surplus public land,

8 including a procedure for notifying potential purchasers (§ 54222), a good faith negotiation period with

9 entities that will use the site for affordable housing (§ 54223), a priority for proposals with the most

10 affordable housing at the deepest levels of affordability (§ 54227), and a 15% affordable housing

11 requirement when sold or leased to a market rate entity that develops 10 or more residential units. §

12 54233. A city retains full control of over whom it sells or leases its surplus property to and is free to

13 sell the property at market value. § 54226.

14 The City argues that its "land use planning and management duties" cannot be infringed upon,

15 but there is nothing sacrosanct about this particular municipal interest. Def. br. at 11-12. Indeed, as

16 discussed in Sect II.A above, numerous other state statutes also establish baseline land use planning

17 requirements that apply to charter cities. Nor could the City argue successfully that the state has no

18 power to outlaw racially discriminatory lal).d use practices because "land use planning and

19 management duties" are within the City's sole control. Def. br. at 11-12.

20 The question is not whether the state may impinge on local control. The,question is whether the

21 state law is narrowly tailored. A state law "may prevail over conflicting local regulation even if [it]

22 impinge[s] to a limited extent upon some phase oflocal control." Int'! Assn. of Firefighters, Local 230

23 v. San Jose (2011) 195 Cal.App.4th 1179, 1197 (quoting Baggett v. Gates (1982) 32 Cal.3d 128, 139).

24 For example, the court in Int'! Assn. of Firefighters held that because the state law regulated the

25 procedure of disciplinary appeals, while leaving the ultimate decision regarding employee discipline in

26 the hands of the City, it was sufficiently "narrowly tailored to limit incursion into legitimate municipal

27 interests," while furthering the legitimate statewide concern of "stable employment relations." Id. at

28

- 12 -Opposition to Demurrer to Verified Petition for Writ of Mandate and Complaint for Declaratory and fujunctive Relief


1 1192, 1205. Similarly here, the Act requires the City to first offer surplus land for sale or lease to a

2 developer who will include at least 25% of the units for lower-income households, but it does not

3 require the City to sell or lease the land to that developer.

4 The City focuses on drawing a distinction between procedural and substantive requirements

5 and implies that only procedural requirements will survive a home rule challenge. Def. br. at 9-10. This

6 is a false distinction. The overarching test is not whether the Act's requirements are procedural or

7 substantive, the test is whether the state law addresses a statewide concern that is reasonable related

8 and narrowly tailored. In Jauregui v. City of Palmdale, decided two years after Vista, the court applied

9 the four part test and made no distinction between procedural or substantive effects of the state Voting

10 Rights Law on a municipal voting law in a charter city. Rather, the court correctly examined whether

11 the state law "avoid[s] unnecessary interference in municipal governance" to determine if the state law

12 is narrowly tailored. Jauregi v. City of Palmdale (2014) 226 Cal.App.4th 781, 802 (review denied

13 August 20, 2014).

14 Here, the Act is narrowly tailored and leaves the decision-making authority regarding the sale

15 of publicly-owned surplus lands with the City. It allows the City to include moderate-income housing,

16 and it does not require the City either to rezone the land or to sell it at less than its fair market value.

17 The City is free to dispose of the land to other entities "[i]f the price or terms cannot be agreed upon"

18 with the prioritized entities. § 54223.

19 The City claims that complying with the Act will "hurt the City's ability to sell those properties

20 for top dollar" (Def. br. at 11) and reduce the sales price for each surplus site." Id at 12. The Act,

21 however, explicitly states that "[t]his article shall not be interpreted to limit the power of any agency of

22 the state or any local agency to sell or lease surplus land[] at less than fair market value." §54226.

23 The Act's requirements to prioritize affordable housing and set aside 15% of the total units as

24 affordable to lower-income households (§ 54233) are modest and analogous to other state laws that

25 apply affordability requirements to residential developments.9 Because the Surplus Land Act is

26 9 See Mello Act(§ 65590 et seq.) and Community Redevelopment Law requires 15 % of private market rate development

27 in redevelopment plan areas to be affordable and 30 percent of the units ifthe agency, or now housing successor, developed the units. Health & Safety Code § 33413.

28

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1 narrowly tailored and reasonably related to the state's need to provide affordable housing, the City's

2 Policy 7-13 is preempted by the Act to the extent the policy conflicts with the Act.

3 In sum, the Act is reasonably related and narrowly tailored. Even were there doubt on this

4 score, any ambiguity must be resolved in favor of the Act. See Dairy Belle Farm, supra, 97

5 Cal.App.2d at 154.

6 B. Other Causes of Action

7 The City does not allege that Petitioners' remaining claims are insufficiently pled but rather

8 that these claims are dependent on the success of Petitioners' preemption claim. The City is incorrect.

9 These remaining claims are not solely derivative of the preemption claim. The section 65008 claim is

10 independent and sufficiently pled. See Pet. iii! 25-26, 29-34. The FERA claim is independent and

11 sufficient pled. See Pet. iii! 25-26, 29-34. The demurrer is treated as admitting all material facts

12 properly pleaded and the demurring party has the burden of showing that plaintiff has failed state a

13 cause of action under any possible legal theory. See Aubry v. Tri-City Hospital Dist. (1992) 2 Cal. 4th

14 962, 967.10

15 IV. CONCLUSION

16 The Surplus Land Act preempts the conflicting City policy. Affordable housing is a well-

17 established statewide concern, and the Act is reasonably related and narrowly tailored to address it. For

18 these reasons, Petitioners request that the Court overrule the demurrer.

19

20

21

22

23

24

25

DATED: September 23, 2016

ristina Pefia Vazquez Attorneys for Petition rs and Plaintiffs

10 The City, of course, may not raise new arguments in its reply brief, and in particular may not assert new grounds for its 26 demurrer on reply. Sugarman v. Falk, 2014 Cal. Super. LEXIS 565, 14-15 citing Crowley Maritime Corp. v. Boston Old

Colony Ins. Co. (2008) 158 Cal.App.4th 1061, 1072 ("The original demurrer was targeted mostly at [Plaintiffs] claims and 27 standing, and Defendants are not permitted to expand the.scope of their demurrer in the reply brief."); See also Scott v.

28 CIBA Vision Corp. (1995) 38 Cal.App.4th 307, 322.

