California Housing Finance Agency v. Patitucci

• Decision Date: 18 September 1978
• Docket Number: S.F. 23784
• Citation: 148 Cal.Rptr. 875,22 Cal.3d 171,583 P.2d 729
• Court: California Supreme Court
• Parties: , 583 P.2d 729 CALIFORNIA HOUSING FINANCE AGENCY, Petitioner, v. Frank PATITUCCI, as President, etc., Respondent.

Page 875

148 Cal.Rptr. 875

22 Cal.3d 171, 583 P.2d 729

CALIFORNIA HOUSING FINANCE AGENCY, Petitioner, v. Frank PATITUCCI, as President, etc., Respondent.

S.F. 23784.

Supreme Court of California, In Bank.

Sept. 18, 1978.

Evelle J. Younger, Atty. Gen., and Victor D. Sonenberg, Deputy Atty. Gen., for petitioner.

John E. McDermott, Los Angeles, Robert T. Olmos, Delano, Patricia M. Tenoso, Jonathan Lehrer-Graiwer, Alan Rader, Los Angeles, Richard Rothschild, San Francisco, Richard Paez, Los Angeles, Sandra Pettit, Long Beach, William Smith, Pacoima, Kathy I. Villeponteaux, Don C. Bryant, Jr., Los Angeles, and Jennifer Soloway, San Francisco, as amici curiae on behalf of petitioner.

James A. Hennefer, San Francisco, for respondent.

RICHARDSON, Justice.

The California Housing Finance Agency (Agency) seeks a writ of mandate compelling respondent, its chairperson and president, to print and issue revenue bonds in accordance with an Agency resolution adopted under the provisions of the Zenovich-Moscone-Chacon Housing and Home Finance Act (the Act) (Health & Saf. Code, § 50000 et seq. (former § 41000 et seq.); all statutory references are to that code unless otherwise indicated). Respondent refuses to issue the bonds on the ground that the resolution violates article XXXIV of the California Constitution (article XXXIV), which requires local voter approval before any "low rent housing project" may be "developed, constructed or acquired in any manner by any state public body." We have issued an alternative writ to consider the important public questions presented. (Cal. Const., art. VI, § 10.) We conclude that article XXXIV is not applicable to the resolution at issue herein and that the bonds authorized may be printed and offered for sale pursuant to the Agency's direction, and without a local election.

We have had occasion recently to examine the application of article XXXIV to similar action taken by the Agency under the Act. In California Housing Finance Agency v. Elliott (1976) 17 Cal.3d 575, 131 Cal.Rptr. 361, 551 P.2d 1193, we reviewed certain Agency resolutions which authorized the issuance of revenue bonds, the proceeds of which were to fund loans to private contractors (Series B bonds) and public entities (Series C bonds) for the construction, development and acquisition of "mixed income housing developments." (See §§ 50952, 51350-51351.) These resolutions defined "mixed income" developments as those in which no more than 75 percent of the units would be made available to those persons deemed unable to pay the rental rates offered by unassisted private enterprise for safe, decent, and sanitary housing. The resolutions did not provide for voter approval.

We measured the Elliott resolutions against article XXXIV, section 1, which provides: "No low rent housing project shall hereafter be developed, constructed, or acquired in any manner by any state public body until, a majority of the qualified electors of the city, town or county, as the case may be, in which it is proposed to develop, construct, or acquire the same, voting upon such issue, approve such project by voting in favor thereof at an election to be held for that purpose, or at any general or special election." We concluded in Elliott that the projects authorized and described in the resolutions were "low rent housing projects" as defined in article XXXIV, section 1, and that voter approval at local elections was required before the projects could be constructed. (17 Cal.3d at pp. 592-593, 131 Cal.Rptr. 361, 551 P.2d 1193.)

In 1976 the Legislature responded to Elliott by adopting the Public Housing Election Implementation Law (§§ 37000-37002, and 50093) which purports to define several of the expressions used in article XXXIV. Subdivision (a) of section 37001, for example, provides that a "low rent housing project" shall not include any "development" (1) which is both privately owned and carries no ad valorem property tax exemption, and (2) in which not more than 49 percent of the units are made available to persons of low income.

In the matter before us, the Agency seeks, by its resolution No. 77-27, to issue its "1977 Series AA" revenue bonds in the aggregate principal amount of $3.75 million. The resolution recites that the bond proceeds are to be used to finance construction loans on a project to be designated by the president of the Agency and which meets the criteria described in section 37001, subdivision (a). Resolution No. 77-27, in section 301 of its article III, specifically provides that "(s)uch financing shall be without regard to whether said development has obtained approval of the local electorate as provided for in Article XXXIV, Section 1 of the Constitution of the State of California." Is the resolution constitutionally permissible under article XXXIV? Stated another way, the issue presented is whether a project meeting the criteria of section 37001, subdivision (a), that is, a privately owned, nontax-exempt housing development, in which no more than 49 percent of the units will be available to low income persons, nonetheless remains a "low rent housing project" within the meaning of article XXXIV thereby requiring voter approval. We conclude that it does not.

The Agency's principal contention is that in assessing the effect of resolution No. 77-27, in the light of Elliott, we should defer to the Legislature's interpretation of article XXXIV, as expressed in section 37001, subdivision (a). We agree, and have said that " '(w)hen the Constitution has a doubtful or obscure meaning or is capable of various interpretations, the construction placed thereon by the Legislature is of very persuasive significance.' " (Methodist Hosp. of Sacramento v. Saylor (1971) 5 Cal.3d 685, 693, 97 Cal.Rptr. 1, 6, 488 P.2d 161, 166, quoting Delaney v. Lowery (1944) 25 Cal.2d 561, 569, 154 P.2d 674.)

[1,2] This rule of deference to legislative interpretation arises from the fact, which we have frequently noted, that the California Constitution, unlike its federal counterpart, is a limitation or restriction on the powers of the Legislature, rather than a grant of power to it. (Los Angeles Met. Transit Authority v. Public Util. Com. (1963) 59 Cal.2d 863, 868, 31 Cal.Rptr. 463, 382 P.2d 583.) From this principle, two constitutional consequences ensue: Any constitutional limitations on legislative power are to be narrowly construed (e. g., Collins v. Riley (1944) 24 Cal.2d 912, 916, 152 P.2d 169), and a strong presumption of constitutionality supports the Legislature's acts. (Methodist Hosp. of Sacramento, supra, 5 Cal.3d at p. 691, 97 Cal.Rptr. 1, 488 P.2d 161; Delaney v. Lowery, supra, 25 Cal.2d at pp. 568-569, 154 P.2d 674.)

In the instant case, as noted, the charter limitation is presented in this context: Article XXXIV requires referendum approval in the affected community before a "low rent housing project" can be developed, con structed, or acquired. Section 1 of the article defines "low rent housing project" as "any development composed of urban or rural dwellings, apartments or other living accommodations for persons of low income, financed in whole or in part by the Federal Government or a state public body or to which the Federal Government or a state public body extends assistance by supplying all or part of the labor, by guaranteeing the payment of liens, or otherwise."

In Elliott, supra, 17 Cal.3d 575, 131 Cal.Rptr. 361, 551 P.2d 1193, we carefully considered the definition of a "low rent housing project." (Id., at pp. 591-593, 131 Cal.Rptr. 361, 551 P.2d 1193.) We concluded that it could embrace a state-assisted "mixed-income" development in which rental accommodations for persons of "moderate" income are combined in a single housing development with rental units for those who, without financial assistance, could not obtain adequate housing. The Act identifies the development of such "mixed" housing as a principal function of the Agency in meeting critical housing needs for both moderate and low income groups, and as a partial solution to well recognized social problems engendered by racial and economic isolation. (E. g., §§ 50003, subd. (b), 50006, 50950, 50952, subd. (b).)

We found significant the allocation, in Elliott, of three fourths of the proposed units to "low income" housing, with the remainder of the development reserved for persons of moderate income. We declared that "the purpose underlying adoption of article XXXIV, section 1, was to permit the people of a community to have a voice in decisions which affect the future development of their community and which could Substantially Increase their tax burden. (Citations.)" (Id., at pp. 590-591, 131 Cal.Rptr. at p. 371, 551 P.2d at p. 1203, italics added.) Though it was not clear that the development there proposed would be exempt from local property taxes (as are traditional publicly owned projects), we observed that it would undoubtedly have an effect on the physical characteristics of the community; moreover, "(i)t is also reasonable to conclude that the projects will place some financial strain on the taxpayers whose communities must provide additional services and assistance to low-income tenants." (Id., at p. 591, 131 Cal.Rptr. at p. 371, 551 P.2d at p. 1203.)

We therefore concluded that the proposed plan was a "low income housing project" In effect, and that "(t)he addition of units for other tenants, though helpful in serving and accomplishing recognized public purposes . . . , does not Substantially Affect either the basic character of the low-rent housing program or its potential impact on the community." (Id., at p. 592, 131 Cal.Rptr. at p. 372, 551 P.2d at p. 1204, italics added.) We expressly left unresolved, however, the question whether a mixed income project which includes a "relatively small" percentage of low income units may be deemed a "low rent housing project" under article XXXIV. (Id., at p. 593, 131 Cal.Rptr. 361, 551 P.2d 1193.)

Thus,...