Denham, LLC v. City of Richmond

In 2017 the city of Richmond (the city) (defendant) amended its general plan to include the Richmond Hills Initiative (the initiative), which was supported by registered voters in the city. The initiative affected an area of land referred to as Hillside Residential in the city’s general plan. The initiative prohibited residential development in Hillside Residential, with a few exceptions. Hospice facilities were excluded from the residential-development prohibition. The initiative differed from the city’s general plan, under which building both single-family and multifamily residential properties was permitted. Because of the prohibition, the initiative included a transferable-development-credit program, under which owners of property in Hillside Residential were granted credits to build properties in other areas of the city without having to comply with certain land-use regulations. In response to the city’s passage of the initiative as an amendment to the general plan, Denham, LLC, Nikta LLC, and other real property owners within Hillside Residential (collectively, the property owners) (plaintiffs) filed an action in California trial court against the city and the city council (collectively, the city) (defendants). The property owners sought an order requiring the city to vacate the amendment because it caused an internal inconsistency within the general plan. The Sierra Club intervened on the city’s behalf to support the initiative. The Sierra Club argued that the general plan and the initiative were not inconsistent, because (1) the transferable-development-credit program still allowed for property owners affected by the initiative to build property elsewhere in the city, (2) some residential development was permitted, and (3) there was a provision within the general plan recognizing that some areas within Hillside Residential could not become residential areas because of environmental concerns. The Sierra Club argued that the restrictions listed in the initiative expanded on the protected areas within the plan. The trial court rejected the Sierra Club’s arguments and concluded that the general plan and the initiative were inconsistent. The trial court ordered the city to vacate the amendment that adopted the initiative into the plan. The matter was appealed to the California Court of Appeal, which considered the trial court’s holding and remedy.