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AIDS Healthcare Foundation Loses Another Hollywood Housing Case

William Fulton on
May 9, 2022

The AIDS Healthcare Foundation has lost yet another appellate case challenging a mostly market-rate development project in Los Angeles – this time unsuccessfully arguing that affordable housing requirements in the long-extinct Hollywood Redevelopment Plan should still be in place.

This time, AHF argued that the city should have imposed a 15% affordable housing requirement on a 200-unit project at Sunset and Cahuenga, three blocks from AHF’s office, because the 15% requirement was contained in the Hollywood redevelopment plan. (The project was approved with 5% of the units set aside for very low-income residents, meaning residents with between 30% and 50% of the area’s median income.)

But the Hollywood plan disappeared in 2012 when the state eliminated redevelopment, and the appellate court rejected a variety of AHF arguments that the 15% requirement should have been imposed.

Though primarily a health-related organization that runs clinics around the country, the AIDS Healthcare Foundation “believes that housing is a human right, and that we are facing a crisis that demands urgent action” and has even created a spinoff foundation to promote “healthy housing”.

Much of the Foundation’s effort has been focused on preventing development it views as gentrifying, especially in the immediate vicinity of its headquarters. In 2016, it was the primary sponsor and funder of the failed Measure S proposition, which would have made it more difficult to increase densities in Hollywood and elsewhere in Los Angeles. More recently, the foundation has sued the City of Los Angeles on several occasions over the approval of dense multifamily projects but has consistently lost those cases in court.

In 2020, for example, AHF lost an appellate ruling in a case that challenged L.A.’s approval of four projects in Hollywood, all within a mile of AHF’s offices on Sunset Boulevard, saying fair housing laws were violated. The appellate court found that the city had not imposed sufficient barriers to affordable housing to meet the legal test that fair housing laws had been violated.

More recently, in January AHF sued to challenge Los Angeles’s housing element, which calls for the city to plan for an additional 500,000 units by 2029.

In the most recent case, AHF argued that the city should have followed the old Hollywood redevelopment plan and set aside 15% of the project’s units for affordable housing. The appellate court ruled that since the city’s redevelopment agency no longer exists and the plan is no longer in force, the city had no such obligation. The appellate court also ruled that even if the plan were in force, it called for an overall 15% affordable housing requirement in the entire plan area, not a 15% requirement on each individual project.

The state’s Community Redevelopment Law, which was repealed in 2012 by the so-called Dissolution Law, required a 15% affordable housing setaside inside redevelopment areas. Los Angeles’s Hollywood Redevelopment Plan mimicked that requirement. AHF argued in court that (1) the city-controlled Successor Agency was still bound by the 15% requirement, and (2) the 15% requirement should be applied to each individual project, not within the plan area as a whole.

On the first argument, the court said bluntly: “Because the Dissolution Law rendered all provisions that depended upon tax increment inoperative, the Dissolution Law rendered the 15 percent requirement inoperative.”

AHF tried to make the argument that even though no new tax increment is being generated, the 15% requirement should be imposed because the city, as the Successor Agency, has police power and therefore could impose such a inclusionary requirement. But the court noted that redevelopment agencies never had police power and therefore the Successor Agency cannot use police power in a way that redevelopment agencies could not. “Because general police powers were not available to redevelopment agencies under the Community Redevelopment Law and the Dissolution Law granted housing successors no greater powers, the City could not, as a housing successor, invoke such powers to require a developer to comply with the 15 percent requirement,” the court wrote.

The court added: “Housing successors have access, generally, only to the funds derived from housing assets and must spend them fulfilling specific tasks, which do not include complying with the 15 percent requirement.” 

During oral argument, AHF’s lawyers argued that, in the absence of tax increment, the city could pay for the 15% affordable units by issuing bonds. But, as the court said, “Bonds, however, have to be repaid, and the former agencies repaid the bonds, generally, from the same source of funds used to pay other obligations—from the tax increment. … The issuance of bonds, therefore, was an integral part of tax increment financing and dependent upon it, not an alternative to it.”

Finally, AHF argued that even though the Hollywood Redevelopment Plan called for a 15% overall affordable housing requirement, the 15% had to be applied to each individual project, such as 6400 Sunset. But the court rejected this argument as well. As the court said, the plan said that the 15 percent requirement “shall apply in the aggregate to housing in the [Hollywood Redevelopment] Project Area and not to each individual case of rehabilitation, development or construction of dwelling units.”

The Case

AIDS Healthcare Foundation v. City of Los Angeles, No. B309892 (filed May 2, 2022)

The Lawyers

For AIDS Healthcare Foundation: Douglas P. Carstens, Chatten-Brown, Carstens & Minteer, 

For City of Los Angeles: Christi Hogin, Best Best & Krieger,

For 6400 Sunset Boulevard LLC: Patricia L. Glaser, Glaser Weil Fink Howard Avchen & Shapiro, 

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