Analysis: Student Affordable Housing Is Locked into the Nishi Project

Between the complexities of legal matters and the nature of political campaigns, the opposition to Nishi is arguing that the affordable housing element is “likely illegal and will probably never happen.”  As one person argued, “It is not included in the baseline features and will be easily (weakened) or done away with in the future.”

I am going to focus this analysis on the baseline project features – but I will point out that our the assertion that it is “likely illegal” is conjecture.  The legal analysis we have seen does not agree with that conclusion, and, in fact, it seems rather unlikely that the courts – during a time when affordable housing in California is considered a crisis, and following California Supreme Court rulings that have granted local governments broader discretion on imposing affordable housing requirements on private developers – would overturn an affordable housing project based on the fact that the beneficiaries are students.

Here we focus on the baseline project features, which are those provisions that may not be changed without subsequent voter approval.

The argument here is that the affordable housing program “is not in the baseline features so it can be changed on a 2-3 vote of a future city council. It seems pretty unlikely that this affordable housing will ever actually happen.”

They further point out that the baseline project features “redirects to the project development agreement. The affordable housing requirement is specified in the project development agreement which can be changed by the city council.”

That is partially correct – the specifics of the affordable housing plan are in fact contained in the development agreement.  However, I would argue that there is sufficient language in the baseline project features that the city council cannot substantially alter the affordable housing program without a vote of the public.

Here is the language: “The Developer shall comply with the affordable housing requirements as set forth in the Development Agreement, which is focused on providing housing for extremely low and very low income students.”

Where I think the language is unclear is whether the developer is bound by the provisions of the Development Agreement at the time of the vote or whether any time the development agreement changes, the requirements change.  I would probably argue that the language is suggestive it is the former, but I can see how a reasonable person could argue otherwise.

However, even with the more lenient interpretation of that language, there is no escaping this facet: “…which is focused on providing housing for extremely low and very low income students.”

That language would seem to bind the developers to producing affordable housing for students, regardless of whether they do or do not have flexibility to change the provisions of the affordable housing plan in the development agreement after the fact.

From that language, the council clearly cannot do away with the affordable housing plan, they also cannot shift it from a student affordable housing plan as currently specified in the baseline agreements to a more traditional affordable housing plan.  The “shall comply,” combined with the specification of what the affordable housing plan is focused on, should be enough to lock in the city to a student affordable housing plan.

There are several implications for this.  First, the council cannot simply shift away from this model based on a 3-2 vote of a future council.

Second, should the court invalidate the affordable housing program, that likely means the entire project would have to go back to the voters, as the affordable housing provision is contained within the baseline project features.  This would appear to be Michael Harrington’s belief as expressed in his letter to council.

It is important to note that Susan Rainier and Colin Walsh have challenged the program, arguing, “The Existing Affordable Ordinance does not permit affordable-housing-eligibility restrictions based on whether an applicant is a student.”

In their petition, their attorneys challenge the student affordable housing on the ground that it violated the city’s existing affordable housing ordinance.

They argue that “all provisions relating to rental housing in the Existing Affordable Ordinance were operative and binding when the City Council considered and approved the Revised Project on February 6, 2018.”