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Board of Trustees of Leland Stanford Junior University v. County of Santa Clara

United States District Court, N.D. California, San Jose Division

October 10, 2019

BOARD OF TRUSTEES OF LELAND STANFORD JUNIOR UNIVERSITY, Plaintiff,
v.
COUNTY OF SANTA CLARA, and SANTA CLARA COUNTY BOARD OF SUPERVISORS, Defendants.

          ORDER GRANTING IN PART MOTION TO DISMISS FIRST AMENDED COMPLAINT; AND DISMISSING ALL CLAIMS WITH LEAVE TO AMEND [RE: ECF 42]

          BETH LAB SON FREEMAN United States District Judge

         Plaintiff Board of Trustees of Leland Stanford Junior University (“Stanford”) brings suit against Defendants County of Santa Clara and the Santa Clara County Board of Supervisors (collectively, “the County”) to challenge the County's Ordinance No. NS-1200.368 (“the Ordinance”) adopted on September 25, 2018. The Ordinance, which applies solely to residential development on Stanford's property, requires that 16% of dwelling units in any new rental or for-sale residential development with three or more units meet certain affordable housing requirements. Stanford claims that it has been singled out to bear the burden of addressing a countywide shortage of affordable housing, despite the fact that Stanford's property comprises less than half of one percent of the land zoned for residential development in the unincorporated County. The operative first amended complaint (“FAC”) asserts a class-of-one equal protection claim under 42 U.S.C. § 1983, and state law claims for writ of mandate and declaratory relief.

         The County moves to dismiss the FAC under Federal Rule of Civil Procedure 12(b)(6). Having considered the briefing and the oral arguments presented at the hearing on August 8, 2019, the Court GRANTS the motion in part, and DISMISSES ALL CLAIMS WITH LEAVE TO AMEND.

         I. BACKGROUND[1]

         The supply and affordability of housing have been longstanding issues in the County, particularly since the early 1960s when the area started transitioning from an agricultural center to a center for technology, innovation, and employment. FAC ¶ 4, ECF 26. The County repeatedly and consistently has recognized that the need for affordable housing is a regional problem affecting the entire County. FAC ¶ 39. The County's Zoning Code allows residential development on approximately 600, 000 acres of unincorporated area in the County, including approximately 1, 747 acres of land owned by Stanford (“Stanford Lands”) and approximately 596, 022 acres of land not owned by Stanford (“Non-Stanford Lands”). Id.

         Development on Stanford Lands is governed by a General Use Permit (“GUP”) issued by the County. The County approved a GUP in December 2000, allowing residential and academic development on the Stanford University campus. FAC ¶ 64. In November 2016, Stanford applied for a modified GUP, seeking approval for “the development of 2, 275, 000 net new square feet of academic space, and 3, 150 net new housing units and student beds (with up to 550 of those units to be housing for Stanford faculty and staff) over an approximately 17-year build-out horizon.” FAC ¶ 76. Stanford currently has a 2018 GUP Application pending. See 2018 GUP Applic., Defs.' RJN Exh. G, ECF 43.

         Over the past two cycles for the County's Regional Housing Needs Allocation pursuant to state housing law (the 1999-2006 cycle and the 2007-2014 cycle), Stanford produced 1, 324 affordable housing units, which was 75% of the total amount of affordable housing developed within the County's jurisdiction during that time frame. FAC ¶ 5. In the current cycle (the 2015-2022 cycle), Stanford is developing at least another 1, 400 affordable housing units in the County's jurisdiction. Id. The affordable housing units described above do not include the hundreds of dormitory-style units that Stanford has built for its undergraduate students. FAC ¶¶ 68, 69. The dormitory units are not counted toward the County's Regional Housing Needs Allocation because they do not technically meet the Census Bureau definition of a “housing unit.” FAC ¶ 69. The County nonetheless has recognized that Stanford's dormitory units make an important contribution to the housing supply at Stanford University. Id. In 2018, the County Director of Planning and Development recognized that Stanford has “singlehandedly satisfied most of our Regional Housing Needs Allocation for affordable housing.” FAC ¶ 74.

         Stanford claims that despite its significant contributions to the development of affordable housing, the County recently decided to single out Stanford “to bear the burden of the County's efforts to remedy its affordable housing problems.” FAC ¶ 59. The County enacted two ordinances that exclusively target Stanford's property and do not apply to any other property in the unincorporated County. FAC ¶ 34. The Ordinance at issue in this lawsuit “applies to any development of non-student housing within the area covered by the Stanford Community Plan, for which the development application is deemed complete on or after July 1, 2019, that would create three or more new, additional, or modified dwelling units by any of the following means, or combination thereof: (a) construction of new dwelling units; (b) conversion of a use to residential from another use; (c) conversion of a use to for-sale residential from rental residential; and (d) subdivision of land to develop residential dwelling units.” FAC ¶ 16. Stanford owns the entire area covered by the Stanford Community Plan, except for two public elementary school sites and other property that has been condemned for public use, such as public rights-of-way. FAC ¶ 17. Under the Ordinance, 16% of qualifying residential units developed within the area covered by the Stanford Community Plan must meet specified affordable housing requirements. FAC ¶ 34.

         The other ordinance, not at issue in this lawsuit, requires Stanford to pay an affordable housing impact fee of $68.50 for each net new square foot of academic space Stanford develops on campus after July 1, 2020. FAC ¶ 35. The impact fee ordinance is being challenged in separate proceedings. FAC ¶ 36.

         According to Stanford, “[t]here is no rational basis for singling out Stanford to address a problem that the County recognizes occurs throughout the County.” FAC ¶ 59. Stanford asserts that the County's conduct is particularly irrational given that Stanford has constructed more than three-quarters of the affordable housing built in the entire unincorporated County since 1999. FAC ¶ 61. The County has not adopted a countywide ordinance addressing affordable housing, and no such proposed countywide ordinance is under consideration. FAC ¶ 80.

         The Ordinance at issue contains a preface articulating a number of findings made by the County Board of Supervisors. See Ordinance, Defs.' RJN Exh. C, ECF 43. The Ordinance discusses the shortage of affordable housing in the County, the imbalance between jobs and housing in the County, data showing that significant numbers of people who work in the County live outside the County, and the impact of resulting commuter traffic on traffic congestion. See Id. at 1-4. After several pages spent addressing the effect of these issues on the County in general, the Ordinance jumps to the specific, stating that “[t]he housing supply and affordability concerns that are experienced countywide are particularly acute at and around Stanford University due to the high housing prices in the area around Stanford that result in a small supply of affordable housing.” See Id. at 4. The Ordinance also states as follows:

The housing supply and affordability concerns that are experienced countywide have a particularly strong effect at and around Stanford University due to the high housing prices in the area and the employment opportunities generated by Stanford. New residents of market-rate housing, including faculty and staff housing within the Stanford Community Plan Area, creates demand for new public and private sector workers. Some of these new workers earn incomes that are only adequate to pay for affordable housing. Because affordable housing is in short supply in the Stanford Community Plan Area and environs, such new workers may be forced to live in less than adequate housing in the area, pay a disproportionate share of their incomes for housing, or commute long distances to their jobs from housing located in more affordable parts of the county or outside of the region entirely.

         Ordinance at 5. The Board determined that these concerns would be alleviated by the Ordinance. Id. at 5-6.

         Stanford alleges that the countywide issues addressed in the Ordinance are not felt more acutely at and around Stanford than elsewhere in the County. See FAC ¶¶ 39-59. Stanford suggests that the County actually passed the two Stanford-only ordinances to obtain leverage in negotiations regarding Stanford's pending GUP application. FAC ¶¶ 76, 84. In May 2018, the County Board of Supervisors announced that the County was considering affordable housing ordinances specific to Stanford. FAC ¶ 79. Stanford objected in written correspondence to multiple County officials and agencies. FAC ¶ 81. Stanford alleges that “County officials and decision-makers expressed a clear intention to get the two Stanford-only ordinances ‘on the books' quickly, in order to give the County negotiating leverage to impose still greater requirements on Stanford during the process of considering its pending permit application.” FAC ¶ 84. Although the County Planning Commission unanimously recommended that the County Board of Supervisors not adopt the Ordinance at issue in this lawsuit, the County Board of Supervisors adopted both ordinances directed toward Stanford Lands at its September 25, 2018 public meeting. FAC ¶¶ 87-88. One Supervisor commented that having the Ordinance “in your pocket” would help with negotiations with Stanford, and another commented that the Ordinance could lead to “something more attractive” down the road.” FAC ¶ 88. Negotiations on Stanford's GUP Application are ongoing. FAC ¶ 89.

         Stanford filed this action on December 20, 2018. See Compl., ECF 1. The County's Rule 12(b)(6) motion to dismiss the original complaint was mooted when Stanford filed the operative FAC. See Motion to Dismiss, ECF 21; FAC, ECF 26. The FAC alleges the following claims: (1) a § 1983 class-of-one equal protection claim brought under the equal protection clauses of the United States Constitution and the California Constitution; (2) a claim for writ of mandate under California Code of Civil Procedure § 1085; and (3) a claim for declaratory relief under California Code of Civil Procedure § 1060. The County seeks dismissal of all claims under Rule 12(b)(6).

         II. LEGAL STANDARD

         “A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted tests the legal sufficiency of a claim.” Conservation Force v. Salazar, 646 F.3d 1240, 1241-42 (9th Cir. 2011) (internal quotation marks and citation omitted). While a complaint need not contain detailed factual allegations, it “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible when it “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

         III. DISCUSSION

         The County seeks dismissal of Stanford's § 1983 class-of-one equal protection claim (Claim 1), as well as Stanford's state law claims for writ of mandate (Claim 2) and declaratory relief (Claim 3). Stanford asserts that all three claims are adequately pled.

         Before discussing the parties' arguments regarding Stanford's claims, the Court addresses the County's request for judicial notice. The Court then takes up the ...


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