Encinitas City Council Settles Housing Lawsuit

Encinitas, CA — The city of Encinitas announced Tuesday that a settlement agreement was reached Monday in a lawsuit brought against the city regarding local housing needs, including the Encinitas Housing Element and residential developments requesting density bonuses.

Developer DCM Properties, Inc. filed the lawsuit against the city in January. DCM's suit challenged the city’s failure to update its Housing Element, provisions of its density bonus ordinance, and Encinitas’ Proposition A as inconsistent with state law.

DCM argued that the city enacted an ordinance with an incorrect interpretation of the state's density bonus law. Enacted in 1979, the law, which gives housing developers the ability to build more units if they set aside a percentage of the units for senior citizens or low- to moderate-income earners, involves a multiplication formula that often results in a fractional number.

Encinitas City Council's ordinance currently calls to round down in that event, whereas, DCM contended, state law requires rounding up.

Here are the provisions of the settlement agreement effective Monday, according to a city statement:

• The city will consider adoption of a density bonus ordinance containing the following provisions:

1. In calculating maximum allowable residential density ("base density") — the density allowed before a density bonus is calculated — the city will “round up” any fraction of a unit to the next higher whole unit. The California Legislature is currently considering Assembly Bill 2501, which is supported by the Gov. Jerry Brown and, if enacted, will require the city to “round up.” Additionally, while the issue has not been determined by any court, the state’s current housing crisis could lead a court to favor a result that would increase the amount of housing in the city.
2. For an applicant requesting “incentives and concessions,” the city will require the applicant to provide information that the requested incentive or concession will reduce the cost of the housing development.

• Consistent with the city’s ongoing efforts, the city will place on the November ballot for voter approval a proposed housing element and related general plan and zoning amendments. This is the same provision contained in the settlement agreement reached with the Building Industry Association in July 2015. The California Department of Housing and Community Development has approved the draft Housing Element as in conformance with state law, and the City Council in June adopted the Housing Element and related general plan and zoning changes. The Council is proceeding to place the documents on the November ballot as required by Encinitas’ Proposition A.
• To conserve the city's resources and avoid incurring significant future attorneys' fees in defending the lawsuit, DCM will receive $125,000 in attorneys' fees in exchange for a release of the claims alleged in its lawsuit, including the Proposition A challenge.

David Meyer, president of DCM, provided this statement to Patch regarding the settlement:

"The settlement agreement importantly should bring the city’s density bonus ordinance into compliance with state law and allow the city to proceed unimpeded to hold an election on its updated housing element while reserving the right to seek judicial sanctions should the updated housing element not be approved by the voters in November."

Encinitas Mayor Kristin Gaspar sent this statement to Patch about the matter:

"The Council evaluated the costly expense of pursuing this case with taxpayer dollars at risk compared to the chance of prevailing in court based on more than one legal opinion. Under the settlement the city has minimized its legal exposure and preserved its right to move forward with the planned November election on the Housing Element as promised to the voters."

The city's prepared statement continues:

"The City Council considered waiting to see whether AB 2501 would be enacted or seeking a court decision at trial. Unfortunately, the anticipated cost of continuing the lawsuit through either of those paths was extremely high. The city is already undertaking its obligations related to the Housing Element under the settlement agreement in effect with the BIA.

"Regarding the density bonus provisions, the council recognized that in Encinitas where projects are relatively small, the effect of rounding up is typically to increase slightly the number of market-rate units and not affordable units. Despite strong local sentiment to persist in rounding down, after taking into consideration the legal expense of pursuing this issue, the low probability of prevailing in court, and the likelihood that state law will require the city to round up, the council decided it was fiscally prudent to agree on the settlement terms described above."

City Councilwoman Catherine Blakespear also sent a statement to Patch. Here's what she had to say about the Council's decision:

"Settling this lawsuit was the fiscally prudent course. We know that the city is out of compliance with state housing laws. We're working to get into compliance by proposing a map for future housing on the November ballot for Encinitas voters to approve, which is required under Proposition A. Hopefully voters approve it and we can avoid spending more money on costly lawsuits like this."

(Image via Shutterstock)