When are Restrictions on Rebuiding Damaged Structures Unconstitutional

[Cluckr7]

My question involves real estate located in the State of: California

I'm in escrow to purchase a condominium in Santa Monica, CA. The appraiser noted that the curent zoning of the condo is legal, but non-conforming. Specifically, the density of the condo complex is too high for the zoning. Worse, according to Santa Monica zoning ordinances, buildings that are destroyed or damaged to an extent of 50% of the replacement cost, then this building must be rebuilt to conform with current code.

Now, because of this, the lender is flaky on whether to grant a loan. My condo is zoned such that the max density is 1 unit / 2000 sf of lot size. Currently, my building is 15000 sf with 21 units. This lot would only support 7 units per current zoning! The thing is, the majority of Santa Monica is zoned similarly, and my rough guess is that at least 60% of the condos are non-conforming.

My questions are:
- Is such a law even constitutional? What if you bought a condo, then they came up with these new zoning districts, then your home is destroyed in a fire/earthquake, and now you suddenly you can't rebuild your condo because the density would be too high. Isn't this a violation of right to own property?
- How has this not come up before? My lender is one of the big 4, and they said they've never seen such an issue before. My realtor said the same. Santa Monica has hundreds of thousands of homes; how is this possible?!?

I can't imagine what happens if an earthquake destroys a good number of condo buildings. The city just kicks half their residents out of their homes because of these zoning laws?

[flyingron]

Yes, zoning laws are generally constitutional as long as they don't violate some discriminatory practice (you can't directly ban low cost housing, for example) and they have been duly enacted.
Making a use non-conforming happens all the time. Your existing use is grandfathered, but they're not going to allow any more development like that in the zone. Rebuilding (as currently stands) a destroyed house is also likely to be a permitted use, making changes however would most likely be denied.

You'll have to ask your lender why this is an issue.

[Cluckr7]

The lender (and I guess me too) takes issue with this because the ordinance says if a house is destroyed or severly damaged, it must be built to conform to the latest code. Well, this means that because the new code has much stricter density rules, only 7 of the existing 21 units can be rebuilt. What happens to the other 14 families?

I feel like this would be a violation of the right to own property as people can't control when fire or earthquake destroys their home, and now some new zoning rules prevent them from rebuilding?!

[flyingron]

The building code is a different issue than zoning. Yes you must comply with the building codes (especially in places subject to frequent natural disasters like hurricanes or earthquakes, you will need to follow the more severe guidance to protect the new structure against these things). I would speak to an attorney as to whether zoning prevents rebuilding a damaged structure (in the same square footage, etc...) is not also grandfathered.

[Cluckr7]

OK well I must be using the wrong terminology. There are no building code issues here.

The only issue is that:
1. The zoning was changed after the building was built such that the current density of the building is too high (1 unit / 730 sf, while code is 1unit / 2000 sf).
2. The Santa Monica zoning ordinance says that non-conforming buildings that are destroyed or extensively damaged must be rebuilt to conform with current zoning rules.

The combination of (1) and (2) above mean that following the law as written means that 14 out of 21 families end up losing their homes. And more generally, I am estimating that 90% of the homes in Santa Monica do not conform with these current zoning rules on density.

It just doesn't pass the "funny look test" from me and I was hoping someone had experience with this before.

[Mr. Knowitall]

This type of ordinance has been used in California for a long time.

The rationale behind the elimination of a nonconforming use when a certain percentage of a building has been destroyed by fire is well stated in State ex rel. Covenant Harbor Bible Camp v. Steinke (1959) 7 Wis.2d 308 [96 N.W.2d 356, 361-362], as follows: "Evidently courts have considered that where a non-conforming use has been carried on in a building which has been accidently destroyed in large measure, it is not unreasonable to compel the owner to conform to zoning requirements thereafter. The investment in an improvement which may not be readily adaptable to a conforming use has been taken away from him by the accident and not by the ordinance. With the improvement substantially destroyed, the land on which it is located will presumably have approximately as much value for use in conformity with the ordinance as otherwise and the public interest in conformity with the ordinance will be served if he is not permitted to continue the non-conforming use."

That case discusses an ordinance imposing the 50% threshold without addressing the constitutionality of that particular threshold; it rejects a statute that imposed a threshold of 75% based on assessed value, where that translated into less than 17% of market value.

It is difficult for me to imagine that the lender hasn't issued loans in the past that are affected by this type of ordinance. It seems more likely that they have done so many times, but this is the first time they've noticed.

[Cluckr7]

Thanks for that reply Mr Knowitall.

I read the case you linked, and just to confirm that I am reading it correctly,
- In this particular case, the court ruled that the city's standard was erroneous?
- In the referenced other cases, the courts ruled that such standards were erroneous?

Where I am going with this is I'm trying to decide (independent of what the lender thinks) if this is actually a problem. This is earthquake country so that possibility of severe damage to the physical building is a real possibility.