Attorneys for the city of Morgan Hill argued before the California Supreme Court last week in a case that pits the people’s ability to challenge local elected bodies’ decisions against private property development rights.
The case, City of Morgan Hill vs. Bushey, plunges deeply into the technical nuances of how the California Constitution allows cities and other government entities to apply land use designations when faced with public pressure through the established, uncontested ballot referendum process.
The legal battle, which has reached the state’s highest court after more than three years, started when the Morgan Hill City Council in March 2015 rezoned a 3.39-acre parcel on the southeast corner of Madrone Parkway and Lightpost Way from industrial to general commercial. Riverpark Hospitality requested the rezoning, and planned to build a 149-room hotel on the site.
The council later rejected a petition—filed by the Morgan Hill Hotel Coalition and signed by more than 4,000 voters—to repeal the new zoning or put the question to the voters in a general election.
In January 2016, the MHHC sued the city for violating the state elections code by rejecting the certified, voter-initiated petition. In February 2016, then-interim City Attorney Gary Baum revisited the council’s original rejection of the petition. He recommended the council approve a ballot measure asking the voters if they wanted the Riverpark property to retain its original industrial zoning, but at the same time challenge the measure in court by filing litigation against Santa Clara County Registrar of Voters Shannon Bushey.
Santa Clara County Superior Court sided with the city in a March 2016 ruling.
The MHHC appealed that decision, which was overturned in the coalition’s favor May 30, 2017, by the California Sixth Appellate District Court.
The city appealed that decision, and on May 30 attorneys for the city, Riverpark Hospitality and MHHC posed their arguments before the state’s six Supreme Court justices, who followed up with a number of incisive questions of the three parties. The hearing took place at the Earl Warren building in San Francisco.
The Supreme Court will issue its decision within 90 days of last month’s hearing.
Riverpark Hospitality is listed as “real party in interest/appellant,” and the MHHC is listed as “real party in interest/respondent” in the case.
The case has been closely watched by some California land use attorneys, who are eager to see how the outcome could impact their municipal and private development clients.
The City Council hired the firm Leone & Alberts to represent the council in the litigation and to present arguments in court.
City Attorney Don Larkin commented on the significance of the case.
“The court is reviewing a rule that’s been in place for more than 30 years,” Larkin said. “For the first time (in 30 years), they’re looking at weighing the rights of the voters against the property interests of property owners—two significant competing constitutional issues they’re looking at.”
The city has consistently argued that if the council had approved the Riverpark zoning referendum and the voters decided to keep the property zoned industrial, that would create an illegal inconsistency between the zoning ordinance (industrial) and the city’s general plan (commercial).
However, the MHHC has argued the city could rezone the Madrone/Lightpost property as one of 12 commercial classifications permitted in Morgan Hill’s zoning code—even if these other zones do not allow hotel use.
MHHC, which represents a number of local hotel owners, also argued against the initial rezoning request, citing fears of the proposed hotel’s impact on the existing market.
Attorney Asit Panwala, whose parents own the Comfort Inn in Morgan Hill, argued before the Supreme Court on behalf of the MHHC.
Experts offer thoughts
Megan Cesare-Eastman, a former deputy city attorney for the City and County of San Francisco, watched the May 30 arguments on the Supreme Court’s live webcast. She said the court’s challenge is to “strike that balance” between cities’ ability to “enact zoning that is consistent with the general plan (and) the people’s right to referendum, to shoot down different types of ordinances they disagree with.”
Cesare-Eastman, who now works for the San Francisco-based firm Conrad and Metlitzky, added, “The people’s referendum power is a constitutional right that provides the people with a means of checking legislation before it goes into effect.”
Historically, the Supreme Court has been reluctant to curb this right, she added.
“I think the court has routinely shot down any sort of challenges to sweeping powers of referendum and initiative,” Cesare-Eastman said. “I find it unlikely that the court would restrict the right of referendum in this context.”
Bryan Wenter—a Walnut Creek land use attorney who represents developers, property owners and public agencies—noted that in the Morgan Hill case, the Supreme Court could upend a 1985 ruling that established a clear “bright line rule” that has “created certainty for developers” for more than three decades.
Wenter, who also watched the May 30 hearing online, predicts the justices will rule in favor of the MHHC, based on their questions in court.
“This will lead to more referenda, more litigation,” said Wenter, who works for the Miller Starr Regalia firm and writes a blog on land use law. “Citizens could run forward with a referendum every time a public agency tries to create consistent zoning. What would happen to public agencies if the public is able to referend every decision?”
He added, “It has the potential to make it harder to accomplish development.”
“If you have a sufficiently motivated community that doesn’t like a certain project, that is a tool that is going to be used to prevent, repeatedly, the democratically elected governing body from moving forward with the project they chose to support,” Wenter said.
Larkin noted that the Supreme Court, unlike the lower courts, “gets to determine the law” and therefore does not have to rely on established case law to make its ruling.
“Our hope is they give us some clear guidance for the future, regardless of where they come out,” Larkin said.
