Referendum Rescinding Zoning That Resolved General Plan Inconsistency Upheld

City of Morgan Hill v. Shannon Bushey (6th Dist., No. H043426, May 30, 2017)

By Sigrid R. Waggener, Counsel, Land Use

Why it matters: In California, zoning must be consistent with the general plan. When a general plan amendment creates an inconsistency with the existing zoning, Government Code Section 65860(c) gives a local agency “a reasonable time” to bring the zoning into conformance with the general plan. What happens when the local agency’s zoning amendment to resolve the inconsistency is subject to a citizens’ referendum? As a result of this decision, the Courts of Appeals are now split. Previously, a zoning amendment could not be invalidated by referendum in situations where the local agency had amended the zoning regulation in accordance with Section 65860(c). deBottari v. City Council, (1985) 171 Cal.App.3d 1204. Sweeping aside the reasoning that led to the Fourth District Court of Appeals’ decision in deBottari, the Sixth District has held that these types of zoning amendments can be invalidated through the referendum process if other zoning designations that could also achieve conformity exist.

Facts: In 2014, the city of Morgan Hill (the City) completed a general plan update that changed the general plan land use designation for a parcel from “Industrial” to “Commercial.” Thereafter, in 2015, the City adopted an ordinance changing the parcel’s zoning from “ML-Light Industrial” to “CG-General Commercial.” This brought the parcel’s zoning into consistency with the parcel’s general plan land use designation.

The new CG-General Commercial designation would permit construction of a hotel on the parcel, and a group opposed to hotel development at this location challenged the zoning amendment via referendum. The City took the position that the referendum was legally invalid because it “would enact zoning that was inconsistent with the City’s general plan.”

The City filed a petition in superior court seeking nullification of the referendum. Following the reasoning of the court in deBottari, the superior court found that a referendum whose purpose was to undo the City’s action to bring its zoning into conformance with the general plan effectively reestablished a zoning-to-general plan inconsistency. The court held that the referendum was invalid on this basis and ordered it stricken from the City’s ballot. The referendum proponents appealed.

The decision: The Sixth District Court of Appeals disagreed with the trial court’s reasoning and, by extension, the reasoning of the deBottari court. The Court of Appeals found that the referendum did not enact an inconsistent zoning scheme, but merely reestablished the status quo of zoning-to-general plan inconsistency. The court further found that reestablishing an inconsistency did not run afoul of Section 65860(c) because (1) the City had other zoning designations to choose from to achieve consistency, such that a reversion back to the original zoning did not create a permanent inconsistency; and (2) Section 65860(c) gave the City a reasonable time frame in which to resolve these types of inconsistencies, such that it could begin the approval process anew for one of the other acceptable zoning designations.

Practice pointers:

• Unless this circuit split is resolved by the Supreme Court along the lines of deBottari, local agencies cannot assume that rezonings made pursuant to Section 65860(c) are unassailable when other zoning options are available.
• It would not be surprising if the California Supreme Court granted review to resolve the conflict. If that were to occur, the Morgan Hill opinion would be vacated and the holding in deBottari will again be the controlling precedent until the Supreme Court decides which interpretation is correct.
• The Morgan Hill court took a narrow view on prohibiting the power of referendum. As a matter of law, neither the initiative nor the referendum power may be used in situations where the legislative body’s discretion is largely preempted by statutory mandate. The court did not view Section 65860(c)’s requirement that zoning inconsistencies be resolved in a reasonable amount of time as “largely preempting” the City’s discretion.
• One troubling aspect of this decision is where a local agency has several zoning designations that could achieve consistency with the general plan. Potential opponents could file multiple referenda trying to halt development until the agency exhausts its supply of applicable zoning.