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HomeMy WebLinkAbout03-Planning - . c ,/"""'''- \.....- --" -.....I :) CI BERNARDINO 300 NORTH "0" STREET,SAN BERNAROINO, CALIFORNIA 9241B RALPH H. PRINCE CITY A TIORNEY December 16, 1985 10.35, Opn. No. 85-43 700.30 Frank A. Schuma Planning Director Re: Density Bonus, Waiver of Future Right to Request QUESTION May the City require a developer to execute a covenant waiving the future right to request a density bonus for a residential housing development as a condition precedent to the sale of sewer capacity rights? FACTS The City of San Bernardino is required by Government Code Section 65915 et seq. to provide, when requested, a minimum twenty-five percent density bonus to developers of residential housing projects. In return, the developer must dedicate a certain minimum percentage of the completed dwelling units as housing for low income households. If the City elects not to grant the density bonus, it must provide other incentives of "equivalent financial value" to the density bonus to facilitate the construction of dwelling units for low income households. b'J The Mayor and Common Council has determined that the City presently contains within its boundaries more than its fair share of the region's housing for low income households. Therefore, they have determined to pursue a policy of discouraging requests for density bonuses by residential housing developers. This policy is accomplished by encouraging developers to voluntarily execute a covenant waiving the present and future right to request a density bonus for the project. This covenant is requested prior to the exercise by the Mayor and Common Council of their discretion. 3 - - c c o J Frank A. Schuma December 16, 1985 Page 2 ANALYSIS As a preliminary note, this discussion of the relationship of the sale of SCRs to density bonus requests must be distinguished from prior opinions regarding land use and density bonus requests. In those earlier opinions, the issue was the relationship of the exercise of the discretion of the Mayor and Common Council on land use permits to requests for density bonuses. In those instances, such discretion must be exercised in a manner consistent with the San Bernardino Municipal Code and State Government Code regulations relative to the specific land use device in question. The issue here is as to the manner in which the City may dispose of its personal property. The Mayor and Common Council have broader discretion when disposing of such personal property than when exercising legislative discretion on the types of land use issues addressed in those earlier opinions. Land use is only one of the number of factors to be considered when making a decision about the sale of the City's SCRs. The Sewer Capacity Rights (SCRs) now held by the City were purchased from the Board of Water Commissioners of the City of San Bernardino. Terms of the sale are set forth in that document entitled Reservation Agreement for Wastewater Treatment Plant Capacity Rights (Agreement). Those SCRs are personal property of the City. The City may dispose of that personal property in any manner consistent with the Charter and any applicable ordinances, resolutions, or pre-emptive state statutes. Paragraph 7 of Agreement reads as follows: "7. Use of Capacitv. The Capacity Rights reserved to the City hereunder shall be held by the Board for the benefit of the City for a period of five (5) years, commencing upon the execution of this Reservation Agreement. Capacity Rights may be used after the completion of the Project: provided, however, the City may designate one or more public agencies or private persons to use all or any portion of said Capacity Rights prior to said completion based on availability of capacity and subject to any allocation conservation established by the Board or the Mayor and Common Council of the City. . . ." .- - - - ~ c o o :) Frank A. Schuma December 16, 1985 Page 3 This is evidence that the SCRs transferred to the City were not transferred in contemplation of their use for a specific real property development of the City. It was clearly contemplated that the SCRs would be transferred by the City to other public agencies or private persons. Since the SCRs were sold to the City with the intent that they not become appurtenances to real property, the SCRs held by the City are personal property (Civil Code Section 663). The sale of its personal property by the City is governed by applicable provisions of the City Charter. California Constitution Article XI Section 5 provides that: "It shall be competent in any city charter to provide that the city governed thereunder may make and enforce all ordinances and resolutions in respect to municipal affairs, subject only to restrictions and limitations provided in their several charters. . ." "Municipal affairs" has been defined as: ". . . all of those public affairs which alone concern the inhabitants of the locality as an organized community apart from the people of the state at large, as supplying purely municipal needs and conveniences . . ." (McQuillins Municipal Corporation 3d Ed. Sec. 4185) The sale of personal property of the municipality a "municipal affair" under this definition and is regulated by the provisions of the City Charter. Cal.Jur. 3d Muni. Section 287) qualifies as therefore (See 45 Section 1 of the Charter of the City of San Bernardino states in pertinent part: "Powers of City. The municipal corporation . . . may purchase, receive and hold real and personal property within and without the City limits: may sell and dispose of the same for the common benefit. . ." - - -- c c o ::) Frank A. Schuma December 16, 1985 Page 4 Therefore, the City has the basic authority to sell its personal property and its SCRs "for the common benefit". However, the Mayor and Common Council has placed specific limits on the sale of the SCRs through the adoption of guidelines to be followed in making such sales. Resolution No. 84-530 sets forth that: "5. The City Administrator shall have authority to approve transfers of sewer capacity rights, not exceeding seventy-five (75) equivalent dwelling units, based upon the guidelines established herein. ~ determination shall be based upon emplovment impact. tax generation. timing of the development according to the development schedule and anv other factors deemed pertinent. Any request for more than seventy- five (75) cumulative equivalent dwelling units of sewer capacity rights shall be submitted to the Mayor and Common Council for their approval." (Emphasis added.) With respect to an application for less than 75 equivalent dwelling units (EDUs) of SCRs, any action taken on that application, whether positive or negative, must be justified by the City Administrator in terms of the guidelines set forth in the resolutions The Mayor and Common Council have reserved to themselves the authority to approve applications for more than 75 EDUs of SCRs. Upon a review of the limited legislative record, it appears that it was the intent of the Mayor and Common Council that the factors which are to be used by the City Administrator would be considered by them when reviewing an application for more than 75 EDUs of SCRs. Such an interpretation is consistent with general rules for the interpretation of resolutions. (45 Cal.Jur.3d Municipalities Section 209.) The Mayor and Common Council may consider additional factors. The general authority of the Mayor and Common Council with respect to the sale of personal property places the only limitation on their ability to act. (Charter Section 40.) This authority is as set forth in Section 40(a) of the Charter, which says in pertinent part that: - - ---- - c c o ) Frank A. Schuma December l6, 1985 Page 5 "Powers of Mayor and Common Council. (a) Purchase and sale of property. Council shall have power to purchase . . . and hold real and personal property . . . and to sell and dispose of the same for the common benefit . . ." Therefore, with respect to any application for the sale of more than 75 EDUs of SCRs, any action taken must be justified in terms of the "common benefit". Also, as with the exercise of discretion under the land use laws, where a beneficial exercise of discretion is consideration for a density bonus waiver, both developer and City must agree that such exercise has "equivalent financial value" to the twenty-five percent density bonus being waived. It should be noted that the entire procedure of requiring voluntary waiver of the right to a density bonus contravenes state policy. Section 65918 of the Government Code reads as follows: "Density bonuses and other incentives: legislative intent. In enacting this chapter it is the intent of the Legislature that the density bonus or other incentives offered by the city, county, or city and county pursuant to this chapter shall contribute significantly to the economic feasibility of low- and moderate-income housing in proposed housing developments." Government Code Section 65918 makes the density bonus provisions applicable to charter cities. The state policy is to promote the development of low-income housing through the use of the density bonus or equivalent financial value. This is in opposition to the policy being pursued by the City. If the City policy was challenged, it probably would be sustained by the courts if incentives of equivalent value were offered to promote low income housing. CONCLUSION The sewer capacity rights held by the City are the personal property of the City. The City may accept the execution of a density bonus waiver for the sale of its sewer capacity rights. When the application is for less than 75 equivalent - - ... - 'ro. t .\..~ r- \..,..t o ') Frank A. Schuma December 16, 1985 Page 6 dwelling units of sewer capacity rights any action taken must be justified under the provisions of Resolution No. 84-530 Section 5. Where the application is for the sale of more than 75 equivalent dwelling units of sewer capacity rights, any action taken must be justified in terms of the "common benefit". Developer and City must, in any instance, agree that the decision to sell the sewer capacity rights to the developer has an "equivalent financial value" to the density bonus which is waived. Respectfully submitted, .~~ N eputy City Attorney JFW:dp cc Mayor City Administrator City Clerk Concur: ~,fIA~Ar:. City torney