SANTA MONICA PINES, LTD., et al., Petitioners and Appellants, v. RENT CONTROL BOARD OF the CITY OF SANTA MONICA, et al., Respondents.
Appellants appeal from a denial of their petition for a writ of mandate (Code Civ.Proc., §§ 1085, 1094.5) wherein they sought reversal of a decision of the Santa Monica Rent Control Board (hereinafter the “Board”) denying appellants' claim that they had a vested right to be excepted from provisions of the Santa Monica rent control law.
Appellants, the owners of a 42-unit apartment building situated in Santa Monica, California, wished to convert it into a 42-unit condominium. The chronology of the relevant events in this case is as follows:
Prior to January 15, 1979, appellants submitted a tentative tract map to the Planning Commission of the City of Santa Monica (hereinafter the “City”).
On January 15, 1979, the Planning Commission approved the tentative map.
On February 27, 1979, appellants filed an application with the state Department of Real Estate for a final subdivision report.
On March 26, 1979, a final tract map was submitted for approval to the Los Angeles County Engineers and was subsequently approved by the Los Angeles City and County Engineers.
On April 10, 1979, article XVIII, a rent control provision, was adopted as an amendment to the City's charter.1 As relates to this instant dispute, a “conversion” permit 2 or a finding that a petitioner had perfected a vested right in his development which exempted the individual from the rent control provision was required before rental property could be converted into a condominium. A “conversion” permit authorized rental units to be taken out of the rental market.
On May 24, 1979, the Santa Monica City Engineers certified that the final tract map substantially conformed to the tentative map and that appellants had complied with “all provisions of local subdivision ordinances of the City of Santa Monica applicable at the time of approval of the tentative map ․”
On June 26, 1979, the City Council of Santa Monica approved the final tract map and it was recorded on January 11, 1980.
On June 29, 1979, the City adopted Ordinance No. 1127, to clarify and implement the charter rent control provision.3
Also on June 29, 1979, appellants sought a vested right exemption from the rent control provision before the Board.
Expenditures made in furtherance of this conversion after tentative map approval were reported by the Rent Control Administration staff to be: “$384 on February 27, 1979 to the Department of Real Estate; $825 on March 26, 1979 to the City of Los Angeles for Plan Check Fees; $500 on March 27, 1979 to the City of Santa Monica for engineering fees.” This totalled $1,709.
After the effective date of the charter amendment, April 10, 1979, the following expenses were reported: “․ $2,543 on April 13, 1979 to L. D. King Engineering; $42,000 on May 11, 1979 to the City of Santa Monica for a conversion tax; $5,250 on May 23, 1979 to the City of Santa Monica for sub-division map fees; and $5,722.59 on June 8, 1979 to TEWA (sp?) Engineering.” This totals $55,515.59.
On July 19, 1979, the Board heard and denied appellants' application for exemption.4
Thereafter, appellants commenced this action seeking a peremptory writ of mandate under Code of Civil Procedure sections 1085 and 1094.5 to compel the Board and the City to set aside their decision denying appellants' application for an exemption from the rent control provision, to issue a permit exempting appellants from the rent control provision, and to issue a “conversion” permit to appellants.
Appellants asserted in their petition that the denial of a vested right by the Board was contrary to Ordinance No. 1127 and that the Subdivision Map Act (Gov.Code, § 66410 et seq.) and Ordinance No. 1127 obligated the Board and the City to determine that appellants had a vested right to proceed with conversion, because the tentative map had been approved before April 10, 1979 (the effective date of the rent control provision), and all conditions required to receive a final tract map had been performed; no discretionary acts remained to be completed by the City and all necessary permits and approvals had been obtained.
The trial court in its Memorandum Opinion and Order found that it was “unquestioned that [appellants] had not by April 10, 1979 secured the final governmental approval necessary to complete the conversion. The evidence is also clear that the Rent Control Board, at the hearing on [appellants'] application for an exemption, found that the [appellants] had not made substantial expenditures or incurred substantial liabilities in good faith reliance on the final approval.” 5
The trial court held that a final subdivision map is required for a vested right and that it represents a starting point for a vested right, as securing a “conversion” permit under the rent control provision is also necessary. The trial court held that a vested right arose where the last necessary governmental approval was secured (including the satisfaction of the rent control provision) and substantial detrimental reliance in good faith had taken place from the time of the final approval. It held that these conditions had not been met.
The trial court also held that the Subdivision Map Act did not preempt the rent control requirement of a “conversion” permit or an exemption from the provision because of having a vested right. The rent control provision was held to be a separate requirement from the Map Act enacted as a land use regulation pursuant to the City's police power.
The trial court concluded that the findings of the Board were supported by the weight of the evidence and its decision was supported by its findings. The peremptory writ was denied and the alternative writ which had also been sought was discharged.
Contentions of the Parties
It is contended by the appellants herein that “their rights to convert the 42 units to a condominium were vested because: (a) the tentative map had been approved prior to the adoption of article XVIII, (rent control charter provision); (b) the final subdivision map had been approved prior to the time of the hearing before the [Board]; and (c) appellants had received all permits and reviews necessary from the City, and by reason of such vested right the [Board] had no discretion but to grant an exemption, or in the alternative determine that no action by it was required.
“Appellants also contend that the respondent [Board] abused its discretion as there was no evidence to support its denial [of the appellants' request for an exemption].”
Respondents City and Board concede that both the tentative and final maps were validly obtained by appellants. They urge that possession of the tentative or final map without more does not excuse compliance with a city's land use regulation, here the rent control provision, which is independent and not supplemental to the provisions of the Subdivision Map Act. Further, respondents contend that no vested right existed for appellants to be exempt from the rent control provision.
The trial court made findings under the substantial evidence and independent judgment rules for reviewing decisions under Code of Civil Procedure section 1094.5. Preliminary to our discussion of the merits, we address the issue of which is the proper standard of review for the trial court so as to apply the correct standard of review of its decision on appeal.6
Appellants sought a determination of having a vested right before the Board. This same issue arose in Billings v. California Coastal Com. (1980) 103 Cal.App.3d 729, 163 Cal.Rptr. 288, where the court stated, “[t]he question presented is whether, by virtue of the county's tentative approval of the subdivision map on December 30, 1976, the owners acquired a vested right to subdivide their land. [¶] As Code of Civil Procedure section 1094.5 applies and a fundamental vested right 7 of the owners was involved, the trial court was required to exercise its independent judgment on the evidence. [Citations].” (Id., 103 Cal.App.3d at p. 734, 163 Cal.Rptr. 288.)
“After the trial court has exercised its independent judgment upon the weight of the evidence, an appellate court need only review the record to determine whether the trial court's findings are supported by substantial evidence. [Citations.]” (Bixby v. Pierno, supra, 4 Cal.3d at p. 143, fn. 10, 93 Cal.Rptr. 234, 481 P.2d 242.) The trial court here found that the findings of the Board were supported by the weight of the evidence and properly used its independent judgment in reviewing the Board's decision.
We next consider whether the trial court's findings were supported by substantial evidence. We conclude that substantial evidence does not support the trial court's findings.
We hold that a vested right exists here, because appellants had effectively obtained all necessary governmental permits and in good faith reliance thereon had expended substantial money (for a condominium conversion) and effort. This conclusion finds support under both the common law doctrine and sections 4605 and 4606 of Ordinance No. 1127 which appellants rely on.8
Under the common law, “if a property owner has performed substantial work and incurred substantial liabilities in good faith reliance upon a permit issued by the government, he acquires a vested right to complete construction in accordance with the terms of the permit. [Citations.] Once a landowner has secured a vested right the government may not, by virtue of a change in zoning laws, prohibit construction authorized by the permit upon which he relied.” (Avco Community Developers, Inc. v. South Coast Regional Com. (1976) 17 Cal.3d 785, 791, 132 Cal.Rptr. 386, 553 P.2d 546 (hereinafter “Avco”).) The vested rights doctrine has been strictly construed to insure that local and state governments have the “maximum flexibility” to enact land use regulations. (Jean McCown-Hawkes and Diana King, Comments, Vested Rights to Develop Land: California's Avco Decision and Legislative Responses, 6 Ecology Law Quarterly 755, 756 (1978) (hereinafter “Vested Rights”); Avco, supra, 17 Cal.3d at pp. 797–798, 132 Cal.Rptr. 386, 553 P.2d 546.)
The court in Avco held that under prior law a government permit triggering the vested right doctrine meant a building permit. Without it no vested right could arise. Further, a building permit was required in Avco pursuant to the California Coastal Zone Conservation Act of 1972 (hereinafter the “Act”).
However, the court recognized that a building permit may not always be necessary for a vested right. (Avco, supra, 17 Cal.3d at p. 793, 132 Cal.Rptr. 386, 553 P.2d 546.) The permits received would need to relate to “identifiable buildings.” (Id., at p. 794, 132 Cal.Rptr. 386, 553 P.2d 546.) 9 (See Raley v. California Tahoe Regional Planning Agency (1977) 68 Cal.App.3d 965, 975, fn. 5, 137 Cal.Rptr. 699; Patterson v. Central Coast Regional Com. (1976) 58 Cal.App.3d 833, 844, 130 Cal.Rptr. 169.)
The appellant in Avco had not applied to the local governmental entity for “permits for specific buildings” by the relevant date of the Act nor on the relevant date did the local entity know or approve “plans indicating such matters as the placement of buildings to be built on the tract, the size of the proposed buildings, the number of apartments [or units] of specified size, or how high the buildings would rise, ․” (Avco, supra, 17 Cal.3d at p. 794, 132 Cal.Rptr. 386, 553 P.2d 546; see Longtin, Cal. Land Use Regulations (1977) § 2.47, pp. 113–115; Jean-McCown-Hawkes and Diana King, Vested Rights, supra, 6 Ecology Law Quarterly at pp. 771–772.)
A common law vested right was denied because “it would be impossible to determine the precise scope of any purported right to construct buildings ․” (Avco, supra, 17 Cal.3d at p. 795, 132 Cal.Rptr. 386, 553 P.2d 546.) Further, receipt of approval of a subdivision map did not make obtaining a building permit a ministerial act, as the relevant building code required compliance with other relevant laws, not just the physical requirements of the building code, which were satisfied by subdivision map approval. (Id., at p. 795, 132 Cal.Rptr. 386, 553 P.2d 546.)
These considerations apply to a development which requires construction. We believe that where no construction is required for development (and hence no building permit is required), as here with a condominium conversion, and an existing structure has subdivision map approval, a common law vested right could arise from the governmental permit, the tentative subdivision map approval.10
“A primary purpose of the tentative map with conditions is to set forth clearly the requirements to which a developer must conform in developing his property.” 11 (Great Western Sav. & Loan Assn. v. City of Los Angeles (1973) 31 Cal.App.3d 403, 411, 107 Cal.Rptr. 359.)
The Supreme Court has held in Youngblood v. Board of Supervisors (1978) 22 Cal.3d 644, 655, 150 Cal.Rptr. 242, 586 P.2d 556, that “the date when the tentative map comes before the governing body for approval is the crucial date when that body should decide whether to permit the proposed subdivision․ Approval of the final map thus becomes a ministerial act once the appropriate officials certify that it is in substantial compliance with the previously approved tentative map. [Citations.]”
In El Patio v. Permanent Rent Control Bd. (1980) 110 Cal.App.3d 915, 168 Cal.Rptr. 276, the appeals court held that no conditions imposed subsequent to tentative map approval could prevent approval of a final subdivision map, citing Youngblood and Government Code sections 66473 and 66474.1.12 (El Patio v. Permanent Rent Control Bd., supra, 110 Cal.App.3d at pp. 923–927, 168 Cal.Rptr. 276.) Additionally, final map approval was required if prior approval had been granted to a tentative map. (Id., at p. 924, 168 Cal.Rptr. 276.) The rent control provision involved in the instant case for condominium conversion applied also in El Patio.13
Turning to the instant case, these aforementioned cases establish that as of April 10, 1979, appellants had not only tentative map approval but effectively final map approval, too, as approval could not be withheld.
The trial court included as one of its findings that “on June 29, 1979, the owners of the property, through their agent, Fredericks, submitted to the Rent Control Board of the City of Santa Monica a request for exemption from the provisions of Article XVIII of the Charter of the City of Santa Monica, and at the time of filing the application owners had obtained any and all necessary building permits and approvals by the Architectural Review Board of the City ․” With respect to building permits and approvals by the Architectural Review Board, substantial evidence does not exist in the record to support this finding. Similar language was apparently used in appellants' petition for mandate. But in appellants' request for an exemption from the rent control provision before the Board, as well as in the record of the proceedings before the Board, no mention was made of having obtained a building permit or Architectural Review Board approval, or that any was required. No mention was made of this in the City's denial of a vested right.
Additionally, the Rent Control Administration Staff indicated that no building permits or Architectural Review Board approvals were needed and appellants so assert in the companion case herein, No. 63129. This is consistent with other recent cases involving this City's “conversion” permit requirement. (Hazon-Iny Development, Inc. v. City of Santa Monica (1982) 128 Cal.App.3d 1, 9, 180 Cal.Rptr. 761, and El Patio v. Permanent Rent Control Bd., supra, 110 Cal.App.3d 915, 927, 168 Cal.Rptr. 276.)
As the trial court herein did not hold oral arguments, but made its ruling upon the pleadings, declarations, and exhibits of the parties, we find no basis in the evidence below to support this finding. Hence, no building permits or approvals were required here.
As no building permits or approvals were required by the Architectural Review Board, appellants had obtained, or were entitled to, all necessary permits prior to the effective date of the rent control provision, April 10. The trial court's findings that appellants were required to have a final subdivision map for a vested right and that they were required to satisfy the rent control provision by seeking a “conversion” permit are not supported by substantial evidence.
The fact that appellants had not obtained a final report from the California Department of Real Estate does not require a contrary conclusion and the Board and the City do not argue that it should. The vested right doctrine concerns completion of construction of a development and permits completion without interference from governmental changes in land use requirements. The report from the California Department of Real Estate concerns permission for sale of the development, an issue not relevant to whether the development may be completed. (California Coastal Com. v. Quanta Investment Corp., supra, 113 Cal.App.3d at pp. 588–589, 170 Cal.Rptr. 263; Bus. & Prof.Code, §§ 11000 et seq.)
We direct careful attention to the fact that we limit our conclusion to this unique situation in which a building has already been built and only its form of ownership is sought to be changed. If construction were required, building permits would be required. Then a number of appellate court decisions subsequent to Avco, many of them cited by the City and the Board herein, would be controlling. These cases hold that a vested right cannot arise until after a building permit has been issued. (Pardee Construction Co. v. California Coastal Com. (1979) 95 Cal.App.3d 471, 481, 157 Cal.Rptr. 184; Simac Design, Inc. v. Alciati (1979) 92 Cal.App.3d 146, 155, 159, 154 Cal.Rptr. 676; Oceanic California, Inc. v. North Central Coast Regional Com. (1976) 63 Cal.App.3d 57, 70–71, 78–79, 133 Cal.Rptr. 664 (hereinafter “Oceanic”).)
Oceanic is not authority for the proposition that tentative map approval does not give rise to a vested right (Oceanic, supra, 63 Cal.App.3d at p. 75, 133 Cal.Rptr. 664). Oceanic involved seeking exemption from the California Coastal Zone Conservation Act of 1972 (the Act) for construction and completion of construction of a planned condominium and single-family community (id., at p. 61, 133 Cal.Rptr. 664). The developer had already secured exemptions from the Act for part of the development and sought the remaining exemptions.
The provisions of the Act prohibited a vested right unless a building permit was secured in addition to beginning construction, performing substantial work and incurring substantial liabilities all in good faith reliance on the building permit. (Oceanic, supra, 63 Cal.App.3d at p. 61, fn. 1, 133 Cal.Rptr. 664.) The property for which exemptions were sought had tentative map and use permits which had been granted, but had expired before final approval or construction had occurred. (Id., at p. 64, 133 Cal.Rptr. 664.)
The court held that most of appellants-developers' contentions concerning vested rights had been answered by Avco and rebuffed efforts to exempt the rest of the project, which was in the design stage when the Act became effective. (Oceanic, supra, 63 Cal.App.3d at p. 62, 133 Cal.Rptr. 664; Richard B. Cunningham and David H. Kremer, Vested Rights, Estoppel, and the Land Development Process, supra, 29 Hastings L.J. at pp. 707–708.)
In view of the fact that the tentative maps had lapsed, no building permits had been obtained and substantial work on the project had not begun prior to the Act's effective date, we disagree with Oceanic as authority for the proposition that “had a final map been approved a vested right would have been acquired.” (Tosh v. California Coastal Com. (1979) 99 Cal.App.3d 388, 394, 160 Cal.Rptr. 170.)
Tosh is distinguishable from the instant case because there the tentative map had not been approved prior to the effective date of the California Coastal Act of 1976. Here, the tentative map was approved prior to April 10, the effective date of the charter amendment.
Billings v. California Coastal Com., supra, 103 Cal.App.3d 729, 163 Cal.Rptr. 288, can be distinguished from the case at bar on the same basis. We again disagree with the Billings court's (the same court which decided Tosh) repetition of language in Tosh requiring a final map approval before a vested right to complete a development can arise. (Billings, supra, 103 Cal.App.3d at p. 736, 163 Cal.Rptr. 288.) All that is necessary is that the applicant be entitled to the final map prior to the effective date of the rent control act charter amendment.
Call v. Feher (1979) 93 Cal.App.3d 434, 443, 155 Cal.Rptr. 387, states upon citation of Government Code sections 66473–66474.7 that “[w]ithout such final map approval, under the circumstances of this case, no cause of action based on a vested right theory can be stated.” This was unnecessary for its decision because the Call court held that under the facts of the case, no right to subdivide could survive tentative map approvals which had lapsed, citing Oceanic. (Call, supra, 93 Cal.App.3d at p. 443, 155 Cal.Rptr. 387.)
Additionally, as relied on in El Patio, we read Government Code sections 66473 and 66474.1 to mandate approval of a final map which is in substantial compliance with the tentative map. Hence, Call appears to propose an unsupportable position, for approval of the tentative map mandates approval of the final map, and thus in Call had the tentative map been valid, final map approval would have been required under Youngblood and El Patio. The developer would thus have had a right to a final map.
The recent case of Hazon-Iny Development, Inc. v. City of Santa Monica, supra, 128 Cal.App.3d 1, 180 Cal.Rptr. 761, from this court (Second Appellate District), does not change our result. In that case, tentative map approval was obtained with the condition attached to it that the number of dwelling units be reduced. (Id., at p. 4, 180 Cal.Rptr. 761.) Subsequent to this conditional approval, the rent control charter amendment under discussion here was enacted. (Id., at p. 5, 180 Cal.Rptr. 761.) The issue concerned whether the landowner was required to seek a “conversion” permit because of this legislation subsequent to its conditional tentative map approval. (Id., at p. 7, 180 Cal.Rptr. 761.)
This court held that the landowner could be required to get a “conversion” permit, because the condition of reducing the number of units required the landowner to secure building permits. (Hazon-Iny Development, Inc. v. City of Santa Monica, supra, 128 Cal.App.3d at p. 9, 180 Cal.Rptr. 761.) The landowner was thus subject to the “general law and Building Code section 303(a) that appellants comply with laws in effect at the time of issuance of the building permit.” 14 (Id., at pp. 9, 11, 180 Cal.Rptr. 761.) This included the subsequent rent control legislation requiring a “conversion” permit. This is to be distinguished from the instant case where no building permit is required and unconditional tentative map approval had been granted.
There is further support for finding a vested right here in that appellants complied with section 4606 of the City's ordinance establishing the presumption that a vested right exists if prior to April 10, 1979, a tentative map was approved and good faith reliance was shown including filing an application for a public report from the state Department of Real Estate and obtaining necessary building permits and approvals by the Architectural Review Board.15 Here, the tentative map was approved January 15, 1979, the application for a public report was filed February 27, 1979, and no building permits or Architectural Review Board approvals were required.
The Board and the City correctly point out that this is just a presumption and must be read with section 4605 which substantially restates the common law principles discussed above. A reading of sections 4605 and 4606 together, in light of our holding that the final map was effectively approved prior to April 10, supports a finding that a vested right exists here.
Section 4605 provides that “No right shall vest under this Chapter unless all conditions precedent to obtaining all necessary governmental approvals have been satisfied ․” Having received their tentative map, filed for a final public report from the Department of Real Estate, and requiring no building permits or Architectural Review Board approvals, appellants have most certainly satisfied “all conditions precedent to obtaining all necessary governmental approvals.” Substantial work had been done and nothing remained to be done by appellants to transform this building into a condominium.
In light of the above, the trial court's finding that appellants had not secured final governmental approval precluding a vested right is not supported by substantial evidence. Final permits were effectively obtained and the court erred in holding to the contrary.
With respect to the remaining two requirements for a vested right, the trial court's findings that appellants had not made substantial expenditures or incurred substantial liabilities in good faith reliance on the City's permits are likewise not supported by the evidence. The appellants could rely on a final permit in good faith to make expenditures to complete this development, because the tentative map was approved, final map approval was required, and there was no need for building permits or approvals from the Architectural Review Board.
With regard to expenditures, distinctions have been drawn between “hard” construction costs and “soft” costs, nonstructural expenditures, such as land costs, options, planning and design costs. The latter have not been included for purposes of establishing a vested right. (Raley v. California Tahoe Regional Planning Agency, supra, 68 Cal.App.3d at pp. 985–986, 137 Cal.Rptr. 699.) However, such distinction has little value here where no construction was required. Therefore, if “soft” costs are the only expenditures to be made, those costs should qualify to establish a vested right.
We also bear in mind that “it is sufficient to show that the work completed and the liabilities incurred have been ‘substantial’.” (Sierra Club v. California Coastal Zone Conservation Com., supra, 58 Cal.App.3d at p. 159, 129 Cal.Rptr. 743.) The Sierra court rejected the notion that proof of actual dollar amounts were required to be shown. (Id., at p. 159, 129 Cal.Rptr. 743.) Expenditures and obligations for significant sums suffice. (Cooper v. County of Los Angeles (1975) 49 Cal.App.3d 34, 43, 122 Cal.Rptr. 464.)
As we stated in Cooper v. County of Los Angeles (1977) 69 Cal.App.3d 529, 537–538, 138 Cal.Rptr. 229 (hereinafter “Cooper II ”), “the extent of substantial liability or substantial construction standing alone means very little. The primary consideration is the overall ‘substantial detriment’ whether it be in terms of liability, construction, or both.”
In Cooper II we discussed using a “percentage comparison” test when a relatively small project was involved to ascertain if substantial expenditures were made. “Under this test, the amount of liability incurred and construction performed in reliance is simply, as its name implies, compared on a percentage basis to the whole. If the percentage is ‘substantial’ in terms of common sense and ordinary logic, then the project is to be validated.” (Id., at p. 538, 138 Cal.Rptr. 229.)
Turning to the case at bar, $1,709 was expended prior to April 10. The City and the Board maintain that these amounts were insubstantial and the significant sums, in excess of $47,000, spent after April 10, were not expended in good faith.
We note the irony in the Board's and the City's position, for having accepted the $42,000 (which is by far the largest portion of incurred costs herein) as payment of the conversion tax by appellants, and having had the use of this money during these intervening three years, they now wish to deny their paid for approval for the appellants' development. It would work an injustice upon the appellants and approve an unjust windfall to the City to so hold.
Further, upon filing the tentative map, appellants became obligated prior to April 10 to pay the conversion tax and other fees. Under the above authorities, and recognizing that estoppel is interwoven with the notion of vested rights (see Avco, supra, 17 Cal.3d at p. 793, 132 Cal.Rptr. 386, 553 P.2d 546, Strong v. County of Santa Cruz (1975) 15 Cal.3d 720, 725, 125 Cal.Rptr. 896, 543 P.2d 264, and Raley v. California Tahoe Regional Planning Agency, supra, 68 Cal.App.3d at pp. 976–978, 137 Cal.Rptr. 699), we hold that appellants expended or became obligated to expend substantial sums in good faith reliance on a government permit. There is no doubt that substantial activity was performed here, because appellants had done everything required to convert. “Substantial detriment” was incurred by the appellants. The trial court's finding to the contrary is not supported therefore by substantial evidence.
We conclude that the evidence before the Board establishes a vested right for appellants to complete this conversion. Since the trial court's findings are to the contrary and are not supported by the evidence, the judgment is reversed and the cause remanded to the trial court with direction to enter judgment granting relief.
1. Relevant to this case is section 1803(t) of the Santa Monica City Charter, article XVIII, which provides as follows:“(t) Removal of Controlled Rental Unit from Rental Housing Market: Any landlord who desires to remove a controlled rental unit from the rental raising market by demolition, conversion or other means is required to obtain a permit from the Board prior to such removal from the rental housing market in accordance with rules and regulations promulgated by the Board. In order to approve such a permit, the Board is required to make each of the following findings:“(1) That the controlled rental unit is not occupied by a person or family of very low income, low income or moderate income.“(2) That the rent of the controlled rental unit is not at a level affordable by a person or family of very low income, low income or moderate income.“(3) That the removal of the controlled rental unit will not adversely affect the supply of housing in the City of Santa Monica.“(4) That the landlord cannot make a fair return on investment by retaining the controlled rental unit. “Notwithstanding the foregoing provisions of this subsection, the Board may approve such a permit:“(1) If the Board finds that the controlled rental unit is uninhabitable and is incapable of being made habitable in an economically feasible manner, or“(2) If the permit is being sought so that the property may be developed with multifamily dwelling units and the permit applicant agrees as a condition of approval that the units will not be exempt from the provisions of this Article pursuant to Section 1801(c) and that at least fifteen (15) percent of the controlled rental units to be built on the site will be at rents affordable by persons of low income.”
2. The Charter amendment makes reference to requiring a “removal” permit but section 4603, subdivision (d), of Ordinance No. 1127, in effect on June 29, 1979, states that “A controlled rental unit is removed from the rental housing market within the meaning of Section 1803(T), if it is moved from its foundation.” We are quite certain that this language was not intended to restrict removal of a controlled rental unit to those units which are moved from their foundation. We therefore refer to the “removal” permit of the April 10, 1979, Charter amendment as a “conversion” permit to eliminate any confusion.
3. Relevant to this case are section Nos. 4604, 4605, 4606 and 4608 which provide as follows:“SECTION 4604. VESTED RIGHTS. EFFECTIVE DATE.“The date of April 10, 1979, shall be used as a reference point for calculating vested rights claims arising under this Chapter.“SECTION 4605. VESTED RIGHTS. BASIC TEST.“In order to have secured a vested right to do or not to do a certain thing notwithstanding the provisions of this Chapter, unless provided otherwise in Section 4607, a person must have secured the last governmental approval necessary to the performance of the desired thing, and in good faith reliance on that approval, must have performed substantial work or incurred substantial liabilities in furtherance thereof. No right shall vest under this Chapter unless all conditions precedent to obtaining all necessary governmental approvals have been satisfied as determined by the Interim Rent Control Board and Permanent Rent Control Board.“SECTION 4606. VESTED RIGHTS. CONVERSIONS.“A property owner or subdivider is presumed to have a vested right to convert a controlled rental unit if, prior to April 10, 1979, the tentative tract map was approved and he or she submits satisfactory evidence of good faith reliance; including:“a) That application for a public report has been filed with the State Department of Real Estate;“b) That necessary building permits and approvals by the Architectural Review Board have been obtained.“A vested right to proceed under this Chapter shall expire within three (3) years of final map approval as to all units not then sold; such unsold units are thereafter subject in all respects to this Chapter.“SECTION 4607. VESTED RIGHTS. CAUSE FOR EVICTION.“If a person acquires a determination from the Interim Rent Control Board or Permanent Rent Control Board that he or she has a vested right to convert or remove a rental unit from the market by conversion, he or she shall be deemed to have acquired a removal permit for the purpose of establishing cause for eviction under Section 1806(I). The other causes for eviction set forth in Section 1806 shall continue to apply together with the other provisions of this Chapter.“SECTION 4608. CITY PERMITS CONDITIONED ON REMOVAL PERMIT.“On and after April 18, 1979, no department, commission, board, or agency of the City shall accept for processing or issue any new permits or applications to demolish or otherwise remove a controlled rental unit or to convert a controlled rental unit to residential use unless such City permit or application is condition on securing a permit under Section 1803(T) from the Rent Control Board.”
4. The Board's administration staff found that “neither Architectural Review Board nor a building permit was required as part of this conversion.” The staff also found that the expenditures made by appellants for the conversion were substantial “in relation to the total expenditures that would reasonable [sic ] be expected to follow the approval of the tentative.” The staff recommended that appellants had “secured a vested right to proceed with the conversion” and that they be deemed to have a removal permit under the rent control provisions of April 10, 1979.The court made a finding that “at the time of filing the application [for an exemption from the rent control provisions] owners had obtained any and all necessary building permits and approvals by the Architectural Review Board of the City ․”
5. We include herein the minutes of this hearing as it helps clarify the issues before us:“SANTA MONICA RENT CONTROL BOARD MEETING, THURSDAY, JULY 19, 1979.“(Earlier items on agenda were heard.)“CHAIRPERSON GOULD: Next item ․ Fredericks Development. The applicant ․“CHIP POST: By way of staff report, this is a request for a conversion of the property at 1251 Fourteenth Street. The staff report indicates that a tentative map was secured on January 15, 1979 and that an application for a report from the Department of Real Estate was filed on February 27, 1979. The applicant has submitted by letter, confirmed by some invoices, expenditures which are claimed to be in reliance on the tentative map. The recommendation is for approval, but I would point out that that is based upon the tentative map as the last governmental approval necessary and it is also correct that the relevant expenditures need to be between the time of the approval, the last necessary approval, and April 10 and in addition be in good faith reliance on that last governmental approval. Now the dates for most of those expenditures are indicated in the staff report. Some, I believe, are after the April 10 date and I would point that out to the Board in light of the previous applicant's discussions. That concludes the staff report.“CHAIRPERSON GOULD: Thank you. Any questions of staff? Comm. Goldman?“COMM. GOLDMAN: Yes. When you said some expenditures were after April 10; unless I have a different sheet of paper than you Mr. Post, it shows $384 on February 27, $825 on March 26, and $500 on March 27. Then $4200—$5200—$5700—after April 10.“CHIP POST: Yes, that's what the sheet says and I picked those up off the invoices that were submitted with the original letter.“COMM. GOLDMAN: So we have approximately $1100—$1600—maybe $1700 spent prior to April 10.“CHIP POST: Yes, that appears to be the case.“CHAIRPERSON GOULD: Any other questions of staff? There being none may we hear from the applicant?“TOM CHRISTIANSON: Well, I think the determining question is ․“CHAIRPERSON GOULD: May we have your name and address. Thank you.“TOM CHRISTIANSON: Yes, my name is Tom Christianson, representing the applicant. My address is # 18 ․“CHAIRPERSON GOULD: Excuse me, Mr. Christianson. I'm sorry. I have asked that people not stand in the aisles or against the walls. Please sit down or leave the room. Thank you.“TOM CHRISTIANSON: Yes, my name is Tom Christianson. My address is # 18 Brookhollow Drive, Santa Ana, California, representing the applicant. It seems to me an applicant or developer here is being penalized if he has maintained his building in a proper condition prior to applying for a condominium conversion. The applicant in this case has been managing this building for approximately four or five years since its construction. The tentative tract map was approved, I believe, on January 15, 1979. The conditions of approval required various minor improvements to be made before the filing of the final map. The total expenditure, I think, to make these improvements, was I believe under $1000. The applicant made various expenditures from that point and legal expenses, filing expenses and architectural and engineering expenses, the major expense which is I believe a typographical error, in the memo; it is a $42,000 conversion tax paid to the City of Santa Monica for the express purpose of a condominium conversion. That tax of course can be paid at any time and is typically accepted just before the final map application. I think the developer made those payments in good faith reliance. I think the developer also in this case is relying basically on what we consider to be a specific reading of the ordinance rather than a basic test of vested rights. I think the City Council has looked towards the difference between an original project, or a new building project, as opposed to a conversion. If you are converting an existing building and a building that is in good shape and there's not a lot of work to be done, it is very difficult to spend a lot of money. I think 4606 specifically excludes the provision that substantial expenditures be made. I think they are aware and whether or not it's your, of course Board's determination to accept the City Council's opinion or advisement regarding that, I think their feeling was that it is just a little more difficult to spend a lot of money. This is a very well maintained building and always has been and it's just difficult to spend those sums of money. If the position of the Council, which I personally happen to disagree with, is that if you do not have your final map before April 10 or they consider that to be final approval, then in this case the final map was not received prior to April 10. So, if that is the sole determining factor which I think is a very tenuous position, considering final approval of a conversion is a non-discretionary item by the City Council, then apparently denial would be the appropriate suggestion. However, I have great difficulty believing that can actually be the case.“If there are any questions, I would be more than willing to answer them.“CHAIRPERSON GOULD: Thank you, Mr. Christianson. Mr. Allen.“COMM. ALLEN: On our staff report we have an item. (End of tape)(new tape)“COMM. GOLDMAN: Funny I can't seem to locate—I have something with Fredericks Development Corp. on it dated June 29, 1979 involving—is it a 30 unit condominium conversion tentative tract # 37301 at 1122 6th St.?“TOM CHRISTIANSON: No it's not.“CHAIRPERSON GOULD: This is 1251 14th Street.“COMM. GOLDMAN: Well, I have something that was․ is Fredericks Development also involved? This is a different project than Fredericks Development?“TOM CHRISTIANSON: We are not involved in any other projects in Santa Monica now.“COMM. GOLDMAN: Are you from the law firm of Wyman, Bautzer, Rothman, and Kuchel․“TOM CHRISTIANSON: No, I'm not.“CHIP POST: No, I think that that's the item # 5 that's Margolies which was withdrawn by the applicant.“COMM. GOLDMAN: OK, I'm sorry.“CHAIRPERSON GOULD: Any other questions of Mr. Christianson?“COMM. GOLDMAN: Yes, the question I have of Mr. Christianson is, does he have a final tract map?“TOM CHRISTIANSON: Yes, as I mentioned earlier, the final tract map has been approved. It was not approved prior to April 10. It was approved on, I believe, June 26, 1979.“COMM. GOLDMAN: June 26?“TOM CHRISTIANSON: June 26.“CHAIRPERSON GOULD: It was approved by the City Council?“TOM CHRISTIANSON: Yes. Like I say, I think the whole question is really going to turn here on whether you determine what your final approval to be. Certainly our opinion and we intend to stress this opinion beyond this Board that the final approval comes at a point when it's a final discretionary approval. There was nothing else we can do. We had complied with all the conditions of approval for the tentative tract map by January 26, 1979, but it takes a certain length of time to process a condominium plan, process it through the county and process it through (unintelligible) organizations. We feel we have proceeded in good faith and we made our original application back in September or October and I don't think there's any mention of this ordinance, but that's neither here nor there at this point.“CHAIRPERSON GOULD: Thank you Mr. Christianson. Any other questions? Any other chits on this item? Thank you.“COMM. STONE: I have a question for staff?“CHAIRPERSON GOULD: Hearing is closed ․ the issue is before the Board.“COMM. STONE: On this issue. The applicant is applying for us to find that they have vested right for the purpose of converting this building. If we should grant that as recommended by your report, is there then ․ what are the additional governmental steps and these include, of course, any before us, that this individual goes through prior to the conversion taking place?“CHIP POST: I don't know what's left.“COMM. STONE: I'm just referring to ․“CHIP POST: No, I think this would be it.“COMM. STONE: Thank you.“CHAIRPERSON GOULD: Any other discussion before the Board on this item, or a motion?“CHAIRPERSON GOULD: Comm. Press?“COMM. PRESS: I am hearing—correct me if I'm wrong. I am hearing two conflicting opinions by two different attorneys. What I'm hearing Mr. Post say is that a tentative final approval—a tentative approval is satisfactory, and what I hear from Mr. Myers is that a final is necessary. And in reading the section, the City Council's addendum to the law, it says in Section 4605, a person must have secured the last governmental approval necessary to the performance of the desired thing. I don't understand why Mr. Post has any question about the fact that it does not say final approval.“CHIP POST: Well, I think the question is what is the necessary, the last necessary government approval and again, these are questions about which reasonable people may differ, and they are the kind that reach Boards for determinations that are not easy.“COMM. GOLDMAN: Mr. Post, may I ․“COMM. PRESS: But I think it's really a separate question for all of these. We're really ․“CHIP POST: Well if you apply the basic test and you then consider what is the last governmental approval necessary, that may vary. I think what the ordinance tries to do is say that in the conversion context, there is a presumption of a vested right and uses the tentative because in that context, that it is the appropriate final governmental decision necessary. Now you've heard differing opinions on that and I suppose you'd fill the room with lawyers or people and you've got equally different number of opinions on it.“COMM. PRESS: Now if the City Council meant tentative, why don't they say tentative?“CHIP POST: Well, they do in the next section regarding conversions.“COMM. GOLDMAN: Well, Mr. Post, may I ask a question. In the rules of statutory construction is the doctrine of expressiounius. The doctrine states, from my old law school days—that if it could have been said and wasn't said it was intended to be expressly omitted. It's the doctrine. If the City Council had before it the opportunity to use the word discretionary mulled it over and opted for discretionary to be out then is it not under the doctrine of expressiounius; the last final meaning the last, final, as opposed to discretionary?“CHIP POST: Well, it's clear that they do not use the word discretionary, but they use the term last governmental approval necessary.“COMM. PRESS: I have another question of Mr. Post. If the City Council had to use the term ‘discretionary’, would we be bound to go by what their rule is of final approval.“CHIP POST: I think the ordinance applies to everyone and I think it's, yes, within their power to do that and pass that ordinance.“COMM. STONE: General question. I have listened ․ to the legal expertise we have before us—we have heard from four attorneys, and I presume if we heard from more as Mr. Post just said, we'd have different opinions; so for myself, I'm not an attorney so I have to go by what seems most appropriate based on the experience of the Board and how I, as at least one Board member, interpret intent and I can only interpret at this point in time, until we make resolution with regard to it that when we say final what we mean, or last, is in fact final and it is on that basis that I will make determinations until we have ruled differently. Thank you.“COMM. GOLDMAN: I'd like to make a motion.“CHAIRPERSON GOULD: Yes, May I just ask a question of Mr. Post. Is there some reason to discriminate between conversions and new construction which I think you indicated and the applicant has indicated there is a difference.“CHIP POST: Well, I believe there is a difference in the sense that the conversion process is—there is less substantial expenditure, but I think the key idea in having the two sections—the basic test and then a specific one for conversions is the idea that at the time of tentative that's the time when the City if fully aware of the nature of the project being proposed and can knowingly grant an approval that upon which an applicant can rely and that's the basis for the specific rule recommended or provided for in Section 4606.“CHAIRPERSON GOULD: Thank you.“CHAIRPERSON GOULD: Motion—Comm. Goldman?“COMM. GOLDMAN: Yes, I move that the application for determination with respect to Fredericks Development Corp., property located at 1251 14th Street, a Board determination that he may be able to complete his condominium conversion of property at 1251 14th Street as it constitutes a vested rights claim be denied.“CHAIRPERSON GOULD: Is there a second to the motion?“COMM. PRESS: I second the motion.“CHAIRPERSON GOULD: It has been moved and seconded that the application be denied for vested rights. Is there a roll call vote?“SECTY TO BOARD: Allen?“COMM. ALLEN: Yes.“SECTY TO BOARD: Goldman?“COMM. GOLDMAN: Yes.“SECTY TO BOARD: Press?“COMM. PRESS: Yes.“SECTY TO BOARD: Stone?“COMM. STONE: Yes.“SECTY TO BOARD: Gould?“CHAIRPERSON GOULD: Aye.“Remaining items on agenda were heard.”
6. “Where the order or decision of an administrative agency affects a fundamental vested right, the reviewing court must exercise independent judgment to reweigh the evidence. But if the administrative order or decision does not substantially affect a fundamental vested right, judicial review is limited to a determination of whether the findings are supported by substantial evidence. (Code Civ.Proc., § 1094.5, subd. (c); Strumsky v. San Diego County Employees Retirement Assn. (1974) 11 Cal.3d 28, 32 [112 Cal.Rptr. 805, 520 P.2d 29].” (Sierra Club v. California Coastal Zone Conservation Com. (1976) 58 Cal.App.3d 149, 154, 129 Cal.Rptr. 743.)
7. “[W]hen an administrative decision affects a right which has been legitimately acquired or is otherwise ‘vested,’ and when that right is of a fundamental nature from the standpoint of its economic aspect or its ‘effect ․ in human terms and the importance ․ to the individual in the life situation,’ then a full and independent judicial review of that decision is indicated ․” (Strumsky v. San Diego County Employees Retirement Assn. (1974) 11 Cal.3d 28, 34, 112 Cal.Rptr. 805, 520 P.2d 29, quoting Bixby v. Pierno (1971) 4 Cal.3d 130, 144, 93 Cal.Rptr. 234, 481 P.2d 242, original italics.)
8. We need not reach the issue of whether the Subdivision Map Act preempts local ordinance in the area or whether the “conversion” provision is constitutional. Our decision is based squarely on the common law doctrine of a vested right precluding imposition of the rent control provision here. Our viewpoint is consistent with one of the underlying theories of vested rights which considers “the plaintiff's [the landowner's] conduct once the permit was granted,” and examines “the extent of action taken in reliance on that permission and the landowner's good faith. In the court's consideration, because it found that the plaintiff had acted in good faith in reliance upon his permit, he was immune from the effect of the later amendment; in effect, he had a vested right that could not be impaired.” (Richard B. Cunningham, David H. Kremer, Vested Rights, Estoppel, and the Land Development Process, 29 Hastings L.J. 625, 679 (1978).)
9. “The use of the building permit as the operative point of governmental approval in vested rights cases is justified on several grounds. First, the building permit stage is the only point at which the government approves the details, height, size, and location of the building to be constructed. The building permit application also provides a final opportunity for the government to satisfy itself that the structure complies with all applicable laws. But the most significant justification for the building permit requirement is that it allows the government to make needed changes in its regulations up to a relatively late point in the land development process.” (Jean McCown-Hawkes and Diana King, Vested Rights, supra, 6 Ecology Law Quarterly at p. 764.)
10. We discuss the permit required for a vested right in terms of its being a final one, rather than the permit being a discretionary one as a few of the appeals court cases have done. (Aries Dev. Co. v. California Coastal Zone Conservation Com. (1975) 48 Cal.App.3d 534, 122 Cal.Rptr. 315; Patterson v. Central Coast Regional Com., supra, 58 Cal.App.3d 833, 130 Cal.Rptr. 169. See Richard B. Cunningham and David H. Kremer, Vested Rights, Estoppel, and the Land Development Process, supra, 29 Hastings L.J. at pp. 701–706.) We do this because the Supreme Court in Avco did not consider the permit involved in the case in terms of its being a discretionary permit. (Avco, supra, 17 Cal.3d at p. 795, fn. 6, 132 Cal.Rptr. 386, 553 P.2d 546.)
11. “Pursuant to various other Government Code sections, prior to approval of a final map, local governments must make numerous findings with respect to its compliance with the general and specific plans, the housing element, environmental protection, and so forth. (Gov.Code, §§ 66473.5, 66474, 66482.)” (California Coastal Com. v. Quanta Investment Corp. (1980) 113 Cal.App.3d 579, 596, 170 Cal.Rptr. 263.)
12. Government Code section 66473 provides in relevant part:“A local agency shall disapprove a map for failure to meet or perform any of the requirements or conditions imposed by this division or local ordinance enacted pursuant thereto; provided that a final map shall be disapproved only for failure to meet or perform requirements or conditions which were applicable to the subdivision at the time of approval of the tentative map ․”Government Code section 66474.1 provides:“A legislative body shall not deny approval of a final map pursuant to Section 66474 if it has previously approved a tentative map for the proposed subdivision and if it finds that the final map is in substantial compliance with the previously approved tentative map.”
13. El Patio held that the City of Santa Monica could not deny final map approval after extending tentative map approval, which was about to expire, upon condition that a “conversion” permit be secured. The rent control provision requiring a permit became effective after tentative map approval had been granted. (El Patio v. Permanent Rent Control Bd., supra, 110 Cal.App.3d at pp. 923–927, 168 Cal.Rptr. 276.)El Patio is distinguishable from the instant dispute because it held that the vested right doctrine was not involved, as the issue was whether the Subdivision Map Act prevented the City from adding conditions before its approval of a final map. The issue was the propriety of failing to grant a final subdivision map. (El Patio v. Permanent Rent Control Bd., supra, 110 Cal.App.3d at pp. 920, 925, 168 Cal.Rptr. 276.) Here, both parties concede that the tentative and final subdivision map approvals were validly obtained.
14. “Once the developer secures a building permit and expends a considerable sum of money in reliance on it, he may acquire a vested right which protects him against shifting government regulation.” (Raley v. California Tahoe Regional Planning Agency, supra, 68 Cal.App.3d at p. 975, 137 Cal.Rptr. 699, citing Avco, supra, 17 Cal.3d at pp. 791–793, 132 Cal.Rptr. 386, 553 P.2d 546.)
15. Appellants do not challenge the constitutionality of the rent control amendment nor presumably the ordinances to implement it. We do not address the issue of the validity of these ordinances. We also do not reach the issue of which, the ordinance or the common law principle, would control, as we find a vested right was established under both. Additionally, we note that we should not rest our decision upon the distinctions between the ordinance and the common law principle. (Flournoy v. State of California (1964) 230 Cal.App.2d 520, 531–532, 41 Cal.Rptr. 190.)
STEPHENS, Acting Presiding Justice.
ASHBY and HASTINGS, JJ., concur.