In The Park at Cross Creek LLC v. City of Malibu (2nd Dist. 2017), ___Cal.App.5th___ (Case No. B271620), the Court addressed the validity of a voter enacted initiative, Measure R, designed to limit large developments and chain stores.

The first component of Measure R required the Malibu City Council to prepare a specific plan for every proposed commercial or mixed use development in excess of 20,000 square feet, addressing a number of development specifics including floor area, traffic, view corridors, public facilities and the like. Following the City Council’s approval, the plan must then be placed on the ballot for voter approval and until such approval, the City may take “no final action on any discretionary approval relating to” the development. Moreover, once approved, all subsequent permits and approvals must be consistent with the approved development.

The second component of Measure R required that “formula” (chain) retail establishments (as defined in the ordinance) must obtain a conditional use permit (CUP). The CUP “shall run solely with the operation of the formula retail establishment for which it was approved . . .” meaning it is valid only for so long as the same business is operating.

Two developers, one proposing a Whole Foods store as an anchor, challenged the initiative measure by writ of mandate, and the trial court ruled that Measure R was facially invalid.

The Court of Appeal affirmed the trial court, holding that the local electorate’s right to initiative and referendum applies to legislative acts, but not administrative or adjudicative ones. Initiatives that lodge administrative or adjudicatory powers in the electorate are invalid, because giving such power to the electorate would stymie efficient and predictable municipal operation.

Stated more concretely, zoning ordinances, general plans and specific plans are considered legislative acts, and therefore within the power of the electorate to regulate by initiative. By contrast, variances, CUPs and subdivision map approvals are considered adjudicative acts, and not subject to the initiative process.

The Court noted that “There is a difference between, on the one hand, voter approval of a specific plan and, on the other, requiring a city council to prepare a specific plan and report, to hold a public hearing about the specific plan and report, and then requiring the plan to be submitted to voters for approval. The former is a legislative act; the latter is an adjudicative one.” While Measure R attempted to justify its requirements as legislative on the basis of setting “policy” for all development projects greater than 20,000 square feet, the Court noted the detail required by Measure R in connection with development plans submitted for approval, and the absence of any underlying policy or standards governing evaluation of such projects.

In addition, the Court held that Measure R’s provision that a CUP “shall run solely with the operation of the formula retail establishment” was invalid. The Court gave the example of a Starbucks and Peet’s being the same type of “use.” Under Measure R, the CUP would only apply so long as a Starbucks operated at the site, and would not be transferrable, for example, to a Peet’s, even though the uses are the same. This violated the well-established principle that a conditional use permit applies to permit uses not allowed as a matter of right in a zone, and when approved creates a right that runs with the land. Under Measure R, the right runs not with the land, but with an identified user, thus “improperly turning a CUP into an ad hominem privilege rather than a decision regulating the use of property.”

This case sets limits on the use of the voter initiative/referendum process as a means to vest in the electorate the power to review and approve specific development projects, which power continues to run through city government.