Misuse of mixed use

Suppose a developer buys a 10-acre parcel of land zoned “MX-MF” – i.e., “mixed use” with a “multi-family overlay.”  As required by the City’s mixed-use zoning ordinance, it then submits a master plan for the site.  The plan shows that six acres will be used for housing, two acres for commercial purposes, and two acres for a park.

The question is:  How many housing units is the developer entitled to build on the property?

You’ll get a different answer depending on whom you ask.

If you posed the question to Andrew Thomas, Alameda’s Assistant Community Development Director, he’d tell you that the maximum number of units is determined by multiplying the total acreage by the permitted density per acre.  We’ll call this the “total-acreage method.”  In our hypothetical, this method would allow the developer to build up to 300 units – 10 acres times 30 units per acre (the density permitted by the multi-family overlay ordinance).

But if you asked Paul Foreman, the retired lawyer and mainstay of the Alameda Citizens Task Force, he’d tell you that the maximum number of units is determined by multiplying the acreage specified for residential use in the master plan, rather than the total acreage, by the permitted density per acre.  We’ll call this the “proportionate-acreage method.”  In our hypothetical, this method would allow the developer to build up to 180 units – six acres times 30 units per acre.

Obviously, the total-acreage method yields more housing units than the proportionate-acreage method on an MX-zoned parcel.  But it also increases the density on the residential portion of the site to 50 units per acre from the 30 units per acre that the proportionate-use method (and the multi-family overlay ordinance itself) would allow.  And higher density often means smaller units and taller buildings.

We created a hypothetical to pose the question – but the debate is all too real.  In fact, it played out last year when the Planning Board and Council were considering the proposed development of the Encinal Terminals by Tim Lewis Communities.

Depending on which document you read, the site owned by Tim Lewis consisted of either 17.33 acres (the number stated in the Development Agreement) or 16.73 acres (the number stated in the Master Plan) of developable land.  We’ll stick with the lower figure, since it’s the one found in the staff reports.  The Master Plan represented that seven acres of the site would be used for public open space (three acres for a “waterfront promenade,” two for a “waterfront plaza,” and two for a “waterfront” park).  In addition, the Master Plan designated one sub-area – acreage unspecified – for a “market hall.”

When Mr. Thomas presented Tim Lewis’s proposal to Council on December 19, he computed the maximum number of housing units permitted on the site using the total-acreage method.  The applicable zoning, he asserted, allowed 491 units (15.48 acres at 30 units per acre plus 1.25 acres at 21.78 units per acre).  With a 20 percent density bonus, the maximum number of units became 589.

In a series of emails prior to the meeting, Mr. Foreman had urged Council to employ the proportionate-acreage method instead and deduct the non-residential acreage from the total acreage to compute the maximum number of housing units.  Mr. Foreman didn’t suggest a particular number, but, if you subtracted just the seven acres of public open space from the total acreage owned by Tim Lewis, the area specified for residential use would be 9.73 acres and the maximum number of units would be 292.

(We’ll ignore, for today, the issue of whether the computation should be based on the amount of land owned by Tim Lewis before or after the so-called Tidelands swap.)

At the December 19 meeting, first Mayor Trish Spencer, then Councilman Frank Matarrese, raised Mr. Foreman’s point (without mentioning him by name).  Wasn’t the maximum number of housing units permitted on an MX-zoned site affected, they wanted to know, by how many acres were dedicated to non-residential uses like commercial and public open space?

Mr. Thomas wouldn’t budge.  The computation based on total acreage applied regardless of the extent of non-residential use, he insisted.  Indeed, he suggested that his conclusion was commanded by . . . wait for it . . . “state law.”  (At which point, for the reasons we discussed last week, our antenna hit the ceiling.  We’ll elaborate below.)

Not surprisingly, Council went with Mr. Thomas and accepted 589 as the number of housing units Tim Lewis was entitled to build on the Encinal Terminals site.

So who’s right?

This question raises an issue of statutory interpretation – specifically, the interpretation of the mixed-use zoning ordinance.  And since no court has ever construed the ordinance, we’ll have to resort to the standard tools for determining the meaning of a statute.  Applying those tools, the Merry-Go-Round’s conclusion is that the proponents of the proportionate-acreage method have the stronger argument.

Virtually every judge and law professor we know will agree that the starting place for statutory interpretation is the language of the statute itself.  The mixed-use ordinance contains a section entitled, “Density,” which reads as follows:

e.  Density.

1.  The City Council shall determine the number of dwelling units that are appropriate for the M-X and the appropriate area of noncommercial development therein.

2.  Residential development within the entire M-X shall not exceed one (1) dwelling unit per two thousand (2,000) square feet of lot area for land designated on the Master Plan for residential use.

This language seems pretty clear:  Council decides how much of an MX-zoned site should be allocated to “noncommercial” (which includes residential) uses.  It also determines how many housing units are “appropriate.”  Then, in determining the maximum number of units for the entire site, the density limitation is applied to the “land designated in the Master Plan for residential use,” not to the total acreage.

By enacting the multi-family overlay ordinance, Council increased the density limitation for sites zoned MX-MF from the figure stated in the mixed-use ordinance (which equates to 21.78 units per acre) to 30 units per acre.  But it did not change the way in which the maximum number of units should be computed.  The mixed-use ordinance still says that the density limitation shall be applied to the “land designated in the Master Plan for residential use,” not to the total acreage.

So the language itself supports the proportionate-acreage method.  To some, like the late Justice Antonin Scalia, the legal analysis would end there.  But other interpretative tools lead to the same conclusion.

Consider, first, whether the total-acreage or the proportionate-acreage method comports with how the state Department of Housing and Community Development, the agency responsible for enforcing the state Housing Element law, treats the concept of “mixed use.”

When City staff prepared the 2015-2023 Housing Element, it included four sites zoned MX-MF – Alameda Marina, Del Monte warehouse, Encinal Terminals, and Shipways – in the land inventory.  But the “realistic capacity” assigned to each of these sites was only 60 per cent of the total number of units that would be permitted under the total-acreage method.  According to Mr. Thomas, the state HCD insisted that the City reduce the number of units attributed to these sites to reflect their zoning as “mixed use” rather than exclusively residential.

“Realistic capacity” is not the same as maximum capacity, and it would be a mistake to argue, as some (not Mr. Foreman) have, that the numbers in the Housing Element set a ceiling for each site.  But the reduction imposed by HCD suggests that the state agency recognizes that not all of the acreage in a mixed-use parcel will be devoted to residential use, and that the “capacity” of the site to provide housing depends on the percentage of the parcel used for that purpose.  Determining the maximum number of units for an MX-zoned site using the proportionate-acreage method would seem entirely consistent with this approach.

Consider, next, whether the total-acreage or the proportionate-acreage method leads to anomalous results.

In our hypothetical, we assumed a 60-40 mix between residential and other uses.  Now let’s flip the residential and commercial acreages and assume that all of the housing will go on two acres of the 10-acre site.  In that case, if the maximum number of units is computed using the total-acreage method, the developer will be allowed to build 300 units on just two acres – i.e., 150 units per acre.

The only way to cram so many units onto so little land would seem to be to build taller buildings – to “go up,” in Mr. Thomas’s phrase.  But the developer might not be able to fit all 300 units onto two acres without exceeding the building height limitations imposed by other zoning laws.  (The multi-family overlay ordinance limits the height of residential buildings with the “MF” designation to 35 feet; the General Plan limits the height of all buildings in the northern waterfront planning area to 60 feet.)  It makes little sense to interpret one part of the matrix of zoning laws in such a way as to create a conflict with another.  Indeed, the usual rule is that a statute should be construed to ensure consistency with other laws covering the same subject.

(And don’t tell us that the state density bonus law requires a “waiver” of the building height limits.  In our hypothetical, the developer hasn’t applied for a density bonus; it’s only seeking to build the maximum number of units allowed by the mixed-use ordinance itself.)

Consider, finally, whether the legislative history of the mixed-use ordinance supports either the total-acreage or the proportionate-acreage method.

The ordinance was enacted in 1979, and it has been amended three times.  Only the 1999 amendment made any material changes, and then the focus was on streamlining the procedures established by the ordinance rather than altering its substance.

We read the available staff reports and Planning Board and Council minutes for each iteration.  (Thanks to City Clerk Lara Weisiger for pulling the 1979 and 1999 materials for us.)  Since the total-acreage method permits the residential portion of an MX-zoned site to be developed at a higher density than a site zoned for residential use only, we looked for any evidence that the Councils that enacted and amended the mixed-use ordinance intended that result.  At least in theory, one could see how a legislative body might conclude that, as long as an MX-zoned site provided for commercial uses and public open space, higher residential density would be acceptable.

We found no such evidence.  The ordinance has contained the language that supports the proportionate-use method – “designated on the Master Plan for residential use” – from the very beginning.  The only change to the “density” section was that the original density limitation – “17.5 dwelling units per gross acre” – was revised in 1999 to the current “one (1) dwelling unit per two thousand (2,000) square feet of lot area.”  But the staff report explained that this revision was not substantive; rather, it was made to eliminate any perceived inconsistency between “gross” and “net” densities.

Thus far the analysis using the standard tools of statutory interpretation.  But, in light of Mr. Thomas’s presentation to Council, we’re compelled to ask:  How does “state law” affect the conclusion?

The short answer is:  It doesn’t.

No state law – not the Housing Accountability Act, not the Density Bonus Law – controls how the City computes the maximum number of units permitted by the mixed-use zoning ordinance.  The HAA may prohibit a city, under certain circumstances, from requiring a lower density for a project than the “applicable, objective general plan, zoning, and subdivision standards and criteria” allow, but it does not prescribe what those underlying standards and criteria must be.  By the same token, the DBL may grant a density bonus, if certain criteria are met, for a project, but the bonus is defined as an increase over the “otherwise maximum allowable residential density,” and the statute does not establish what maximum is otherwise allowable.

During his presentation, Mr. Thomas showed Council a slide declaring, “Housing Accountability Act + Density Bonus Law prohibit City from using regulatory process to reduce density.”  But with all due respect to our City Planner, this statement begs the real question:  What is the maximum number of units permitted by the mixed-use ordinance in the first place?  Once that question is answered, the provisions of the HAA and DBL kick in – but not until then.  If 491 units are permitted by the ordinance, properly interpreted, on the Encinal Terminals site, state law will tie Council’s hands.  But state law will have the same effect if only 292 units are allowed.  The issue is not one of the impact of state law, but of the meaning of the municipal ordinance.

If the proportionate-use method is the correct one for determining the maximum number of units permitted on an MX-zoned site, the Planning Board and Council will have two choices.

On the one hand, they can send the developers back to the drawing board to recalculate their housing numbers and revise their planning documents accordingly.  As we’ve already pointed out, for the Encinal Terminals site, this will mean a reduction in the baseline number of units – i.e., the number before the density bonus – from 491 to 292.  Similar revisions would need to be made to the other pending proposals for MX-zoned sites:

• The latest master plan for the Alameda Marina proposes a mixed-use development on a site on which 21.62 acres of land are zoned MX-MF and 4.89 acres are zoned for industrial use. The plan calls for 7.98 acres of commercial use and 4.25 acres of public open space.  Assuming these uses will take place in the area zoned MX-MF, 9.39 acres will be left for residential development.  Under the proportionate-use method, the maximum number of units on the site will fall to 282 (before any density bonus) from the 760 shown in the master plan (which includes the bonus units).

• The latest proposal for the Shipways site contemplates mixed-use development of an 8.1-acre parcel zoned MX-MF.  The proposal reserves 2.5 acres for public open space, leaving 5.6 acres for residential development.  Under the proportionate-use method, the maximum number of units on the site will fall to 168 (before any density bonus) from the 292 shown in the proposal.

Now, we know there are a handful of people in town who might consider this to be a salutary result.  But we already can hear the howls of outrage – and envision the tsunami of tweets – from the local housing advocates who regard any limitation on residential development as a form of fascism.  No Council member, especially those running this November, would risk having the wrath of this group descend upon her.

But there is an alternative solution:  amend the mixed-use ordinance to enshrine the total-acreage method as the one to use for MX-zoned sites in the future.  Maybe, if City Attorney Janet Kern will go along, such an amendment could be pitched as a “clarification” of, rather than a change to, existing law.  Vice Mayor Malia Vella might even be primed to opine that it would save the City from paying high-priced lawyers to defend a law that has been misinterpreted – by her predecessors, of course – in the past.

Amending the mixed-use ordinance would be the politically expedient way to go.  But make no mistake:  It would confirm that an ordinance intended to promote a balance between commercial use and public open space on the one hand and housing on the other now has transmogrified into an ordinance enabling and, indeed, encouraging residential development at an even higher density than any other City – or, for that matter, state – law allows.

Is that a good thing?  We’ll let the public decide.

Sources:

Mixed-use ordinance: 30_4.20___M_X__Mixed_Use_Planned_Development_District.

Multi-family overlay ordinance: 30_4.23___Multi_family_Residential_Combining_Zone.

Encinal Terminals: 2017-12-19 Ex. 2 to staff report – Master Plan; 30_4.23___Multi_family_Residential_Combining_Zone.2017-12-19 Ex. 1 to staff report – Development Agreement and Exhibits; 2017-12-19 Correspondence – Updated 12-19

Alameda Marina: MP Draft 2016-07-08; alameda_marina_deir_dec2017_part_1_bw

Shipways: 2017-07-24 staff report to PB