Reviving Dormant Real Estate Projects: Reviving Dormant Real Estate - - PowerPoint PPT Presentation

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Reviving Dormant Real Estate Projects: Reviving Dormant Real Estate Projects: Legal Considerations

Evaluating and Assessing Land Use Entitlements, Discretionary Approvals, and Other Key Issues

T d ’ f l f

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific WEDNES DAY, JUNE 5, 2013

Today’s faculty features:

David P . Waite, Partner, Cox, Castle & Nicholson, Los Angeles Ellen Berkowitz, S hareholder, Gresham Savage Nolan & Tilden, Los Angeles

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Reviving Dormant Real Estate Reviving Dormant Real Estate Projects: Legal Considerations

CLE Webinar – June 5, 2013 ff d bi d bli i

D id W it

Strafford Webinars and Publications

David Waite Cox, Castle & Nicholson, LLP Ellen Berkowitz Ellen Berkowitz Gresham Savage Nolan & Tilden PC

Contact Information

David Waite Cox, Castle & Nicholson, LLP Cox, Castle & Nicholson, LLP 2049 Century Park East, 28th Floor Los Angeles, California 90067 (310) 284‐2200 dwaite@coxcastle com dwaite@coxcastle.com Ellen Berkowitz Gresham Savage Nolan & Tilden PC Gresham Savage Nolan & Tilden, PC 333 South Hope Street, 35th Floor Los Angeles, CA 90071 (213) 213‐7249 Ellen.Berkowitz@GreshamSavage.com

6

Reviving a Project? Reviving a Project?

• What development rights have been granted?

p g g

• Are those development rights vested?

p g

• Do project revisions or implementation require

further environmental review?

7

Viability of i i j Reviving a Dormant Project

• Does it make sense to revive a dormant

Does it make sense to revive a dormant project?

– What obligations fees mitigation measures and – What obligations, fees, mitigation measures and

• ther conditions may have been imposed on the

project? p j – Does the project still work economically? – Are the uses still viable? Are the uses still viable?

8

Potential Obligations Potential Obligations

• Be aware of:

Be aware of:

– Significant infrastructure improvements Dedications of parkland streets – Dedications of parkland, streets – Construction of public facilities I t f – Impact fees – Contractual obligations (i.e., development agreement prevailing wage) agreement, prevailing wage)

9

Potential Liabilities Potential Liabilities

– Compliance with environmental regulations Compliance with environmental regulations

• Clean‐up of contamination
• Restoration of habitat
• Construction of flood control measures

10

Local Regulation Local Regulation

• Check city or county regulations

Check city or county regulations

• Rules vary

– City of Los Angeles City of Los Angeles

• Vesting zone change

City of Carson – City of Carson

• Use of permit

County of Riverside – County of Riverside

• Map conditions

11

Vested Rights Vested Rights

• Common Law Vested Rights

Common Law Vested Rights i i

• Vesting Tentative Maps
• Development Agreements

12

Common Law Vested Rights Common Law Vested Rights

• Avco Community Developers, Inc. v. South Coast Reg’l

y p , g Comm’n, 17 Cal. 3d 785 (1976) – Common law vesting does not apply unless the d l h developer has:

• A validly issued building permit

P f d b t ti l k

• Performed substantial work
• Incurred substantial liabilities in good faith

reliance upon the building permit reliance upon the building permit

13

Refinements of Avco Rule Refinements of Avco Rule

• Vested rights granted by governmental permit

Vested rights granted by governmental permit are no greater than those rights specifically granted by the permit granted by the permit

Santa Monica Pines Ltd v Rent Control Bd 35 – Santa Monica Pines, Ltd. v. Rent Control Bd. 35 Cal.3d 858 (1984)

14

Refinements of Avco Rule Refinements of Avco Rule

• A governmental permit must be valid to

g p vest rights

– Strong v. County of Santa Cruz, 15 Cal.3d 720 Strong v. County of Santa Cruz, 15 Cal.3d 720 (1975)

• Even if the property owner did not know of

Even if the property owner did not know of the defect in the permit

– Pettit v City of Fresno 34 Cal App 3d (1973) Pettit v. City of Fresno, 34 Cal.App.3d (1973)

15

Refinements to Avco Rule Refinements to Avco Rule

• No vested right in existing zoning anticipated

No vested right in existing zoning, anticipated zoning, or zoning for highest and best use

– Gilliland v. County of Los Angeles, 126 Cal.App.3d 610 (1981) 610 (1981)

16

Refinements to Avco Rule Refinements to Avco Rule

• Vested rights can be lost if development

Vested rights can be lost if development threatens public safety

– Davidson v. County of San Diego, 49 Cal.App.4th 639 (1996) 639 (1996)

17

Refinements to Avco Rule Refinements to Avco Rule

• Vested rights can also be lost if abandoned

Vested rights can also be lost if abandoned

– Fact intensive inquiry – Stokes v. Board of Permit Appeals 52 Cal. App. 4th 1348, 1357 (1997); Pardee Construction Company

• v. California Coastal Commission, 95 Cal.App.3d

471, 157 Cal.Rptr. 184 (1979)

18

Expiration of Building Permit Expiration of Building Permit

• Impact of expiration of building permit

Impact of expiration of building permit

• Some city codes require new building

permit even if rights vested permit even if rights vested

• Compliance with CALGreen?

19

Vesting Tentative Maps Vesting Tentative Maps

• Subdivision Map Act; Govt. Code §66498.1 et seq.

p ; § q

• Adopted in 1984 in reaction to Avco and experience

p p with development agreements

• Get vested right to proceed with development in

substantial compliance with local ordinances, policies and standards when map application is policies, and standards when map application is deemed complete

20

Vesting Tentative Maps (cont.) Vesting Tentative Maps (cont.)

• City must process map – approve or deny based on

y p p pp y statutory criteria

• Not a legislative act – not subject to referenda (is

subject to CEQA)

• Does not control exercise of city’s discretion on

future land use decisions (e g CUP) no guarantee future land use decisions (e.g., CUP), no guarantee that will be approved

21

Vesting Tentative Maps (cont.) Vesting Tentative Maps (cont.)

• Map Act provides for life of maps

Map Act provides for life of maps i Ci i bj

• Annexing Cities are not subject to county

approved vesting maps (incorporating cities ) are)

22

Contents of a Vesting Map Contents of a Vesting Map

• Says “vesting” on the map
• Additional local requirements

– Cities and counties must adopt implementing

• rdinances

Cities and counties may impose conditions – Cities and counties may impose conditions reasonably related to the rights conferred – Cities and counties may require information Cities and counties may require information related to standards established for approving a vesting maps

23

Development Agreements Development Agreements

• Govt. Code §65864 et seq.
• Govt. Code §65864 et seq.
• Authorized in 1979 in reaction to Avco
• Private contract between city/county and developer

Private contract between city/county and developer

• Discretionary legislative action (subject to

referendum) referendum)

• Subject to CEQA
• 90 day statute of limitations

90 day statute of limitations

24

Development Agreements (cont.) Development Agreements (cont.)

• Vests rules, regulations, and policies in effect at time

, g , p

• f execution of the agreement (unless otherwise

provided in the agreement) d d d h b b

• Conditions negotiated on ad hoc basis – not subject

to Nollan/Dolan limitations

• Generally limited to city limits but can be entered
• Generally limited to city limits, but can be entered

into for property in sphere of influence

• Both annexing and incorporating cities subject to

g p g j previously executed agreements

25

Development Agreements (cont.) Development Agreements (cont.)

• Development agreements do not “contract

Development agreements do not contract away” the police power

– SMART v County of San Luis Obispo 84 – SMART v. County of San Luis Obispo, 84 Cal.App.4th 221 (2000). – Mammoth Lakes Land Acquisition LLC v Town of Mammoth Lakes Land Acquisition LLC v. Town of Mammoth Lakes, 191 Cal.App.4th 435 (2010).

26

Development Agreements (cont.) Development Agreements (cont.)

• City may terminate only if on substantial

City may terminate only if, on substantial evidence, it is shown that developer has not complied in good faith on conditions complied in good faith on conditions

27

Practice Tip Practice Tip

• For either Development Agreement or Vesting

For either Development Agreement or Vesting Map – developer should consider obtaining full copy of applicable agency codes on date of full copy of applicable agency codes on date of vesting

28

If Project No Longer Viable If Project No Longer Viable

• Does approved project need to be

changed? g

– Size reduction – Minor change of use (condo to rental) Minor change of use (condo to rental) – Major change of use (residential to industrial)

• Significant revisions to entitlements?
• Significant revisions to entitlements?
• Re‐Approval process?

29

Project Revisions S b E i l R i Subsequent Environmental Review

• CEQA Guidelines §§15162‐15164

§§

• Subsequent EIR

– Used when there are major revisions to the previous EIR S l t l EIR

• Supplemental EIR

– Used when minor additions to the prior EIR are required

• Addendum

– Some changes or additions are necessary, but a subsequent or supplemental EIR is not necessary

30

Subsequent Negative Declaration Subsequent Negative Declaration

• CEQA Guidelines provides for preparation of

Q p p p subsequent NDs and MNDs and of an Addendum to a ND or MND

• Same thresholds and criteria apply to preparing a

Subsequent ND or MND Subsequent ND or MND

• Section 15162(b) addresses situations where a

Section 15162(b) addresses situations where a Subsequent EIR is prepared after ND is adopted

31

Local and Proposed State Regulation Local and Proposed State Regulation

• Some local agencies have adopted formal or

Some local agencies have adopted formal or informal rules purporting to limit the life of an environmental analysis environmental analysis

• SB 754 would prohibit use of EIRs more than 7

years old years old

32