City of Encinitas has housing lawsuits coming and going

It was one in, one out for the city of Encinitas on June 27 as it announced the settlement of one housing-related lawsuit, and another was filed the same day.

The Encinitas City Council decided to settle a suit brought by DCM Properties Inc. in January. That lawsuit 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.

Though the council already voted last month for a Housing Element Update — which, because of 2013’s Prop A, must be put on the November ballot — it decided to settle with DCM (as it had with another lawsuit filed by the Building Industry Association of San Diego last year) to avoid costly litigation.

Meanwhile, it is that original settlement with the BIA that is the subject of a lawsuit filed June 27 by the Encinitas Residents Alliance (ERA), a coalition of Encinitas neighbors that is getting support from the nonprofit advocacy group North County Advocates (NCA).

The aim of this newest lawsuit is to challenge the settlement agreement with the BIA as unconstitutional. The ERA would like to see that pact invalidated, and specifically to overturn the Council’s approval of the CityMark Hymettus Estates density bonus project in Leucadia, one of six pipeline projects ERA claims are treated specially as a result of the BIA deal.

“This illegal agreement binds the City in their decision making and gives unique, preferential treatment to six density bonus projects including Hymettus Estates,” Bruce Ehlers, a former Encinitas Planning Commissioner and NCA board member said in a news release. “It changes how they calculate the number of units permitted and the net result is almost double the number of housing units allowed by our local zoning.”

At issue in each of the three lawsuits is the previous city ordinance regarding density bonus-related development and its incongruity with California’s density bonus law, which allows private developers to build more homes on a property than city restrictions allow if they agree to build some low-income homes in their project.

The amount of homes that must be set aside as low-income is calculated by multiplying the net acreage of a property by the number of dwelling units.

In July 2014, the Encinitas City Council voted to round fraction numbers down in that calculation and this decision was challenged by BIA, and later DCM, as going against state law.

As part of the June 27 settlement with DCM, the city agreed to round up any fraction in that calculation, a move it felt comfortable with in no small part because the state legislature is currently considering AB 2501, which is supported by the governor and would require cities to round up in that calculation.

In addition, the city is already placing the proposed Housing Element Update and related general plan and zoning amendments on the November ballot — fulfilling its part in both the BIA and DCM settlements.

Finally, in the June 27 settlement, DCM will receive $125,000 in attorneys’ fees in exchange for the release of the claims alleged in the lawsuit, including a challenge to Prop A itself.

According to a city release “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 release went on to say that “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.”

ERA contends in its lawsuit that allowing the density bonus calculation to be rounded up instead of down at Hymettus Estates (approved May 25, 2016 for development at 378 Fulvia Street) and not reducing net acreage due to a large stormwater detention pond on the property goes contrary to municipal code. It goes on to say that “these advantages are significant for developer CityMark because rounding down would only permit seven houses to be built using density bonus, not the nine houses the city approved.”

Without density bonus, only five houses could be built.

The lawsuit also challenges the city’s approval of the Hymettus Estates Environmental Impact Report (EIR), which ERA says “failed to adequately disclose and analyze all environmental impacts and the violation of Encinitas’ Municipal Code when it exceeded height limits and ignored other code requirements. Further, the City’s failure to disclose communications with the developer violated ERA’s right to public records.”

The city of Encinitas had no comment on the ERA lawsuit, according to city spokesman Chance Shay.