UPDATE: Court Upholds Growth Control Ordinance Restricting Density To One Unit Per 20 Acres

In Arcadia Development Company v. City of Morgan Hill (— Cal.Rptr.3d —-, Cal.App. 6 Dist., August 5, 2011), a court of appeal considered the validity of a growth control ordinance that imposes a density restriction of one unit per 20 acres which applies to only one property in the city. The court of appeal found that the ordinance is valid because it advances the city’s efforts to discourage sprawl and maintain the city’s rural character.


The Arcadia Development Company (“Arcadia”) requested annexation of its 80-acre parcel of land in the City of Morgan Hill (“City”) in 1986. An environmental impact report indicated “the development of the Arcadia property would be contiguous with and a logical extension of existing development.” The City approved Arcadia’s request and its property was added on March 19, 1990, to City’s urban service area. Arcadia later received a housing allotment for 11 acres of its land leaving a 69-acre parcel undeveloped.

The City had previously adopted a residential development control system in the late 1970s. In 1990, City’s voters passed Measure P “to halt expansion of City’s urban service area.” Measure P prohibited “further addition of land to City’s urban service area until City’s inventory of residentially developable land was insufficient to meet five years’ growth.” It provided an exception if “the land qualified as desirable infill, defined as a parcel of 20 acres or less, abutting City on at least two sides, or abutted on one side by City and having two other sides within a quarter mile from a City boundary.” Measure P also included a density restriction which provided that “properties added to the urban service area between March 1, 1990, and the effective date of Measure P could not be developed at a density greater than that allowed by the county general plan to which the property would have been subject absent its annexation.” The density restriction’s purpose “was to discourage ‘urban sprawl and noncontiguous development’ in order to assure that ‘City services and resources are not unduly burdened.'” The effective date of Measure P was December 8, 1991, and it was set to expire in 2010.

In 2002, City began considering extending Measure P until 2020. Arcadia urged City not to extend the density restriction on the ground that it was unfair because Arcadia’s property was the only property subject to the restriction. However, the voters approved Measure C and it became effective April 17, 2004. Measure C, which is codified in City’s municipal code as section 18.78.070, prohibits City from seeking to add “any land to its urban service area ‘until such time as the city council finds that the amount of undeveloped, residentially developable land within the existing urban service area is insufficient to accommodate five years’ worth of residential growth.'” Section 18.78.070 only allows City to expand its urban service area if it concludes “‘that the expansion would not unduly burden city services, and that the expansion would beneficially affect the general welfare of the citizens of the City.” Measure C extends the density restriction until 2020.

Although Arcadia did not challenge Measure P, it filed a lawsuit after Measure C was passed in 2004. Arcadia asserted the ten-year extension of the density restriction amounted to a prejudicial use of the City’s police power, violated its right to equal protection, and amounted to inverse condemnation. The trial court found that Arcadia’s lawsuit was barred by the statute of limitations. However, on appeal, the court of appeal reversed that decision. The parties later agreed to dismiss the inverse condemnation claim. On remand, the trial court found in favor of City on the ground that it had a rational basis for limiting development of Arcadia’s property.


The court of appeal affirmed the decision of the trial court. The appellate court acknowledged that, although the density restriction does not mention Arcadia’s property by name, there is no dispute that it is the only property subject to the restriction and therefore the ordinance singles out the property for differential treatment. However, the court found that the density restriction was a valid exercise of City’s police power and did not violate Arcadia’s right to equal protection.

Arcadia asserted City abused its police power by spot zoning its property. The court rejected this argument because Arcadia property is not a small parcel (it is almost 70 acres in size) and it is not surrounded by properties that have less restrictive zoning designations. Although the land on two sides of Arcadia’s property is developed, “the land on the other two sides is rural agricultural, just like the Arcadia property.”

In order to be a valid exercise of City’s police power, the density restriction “must bear a reasonable relationship to the public welfare and may not be arbitrary or discriminatory.” The two goals of the restriction are (1) “minimizing the burden on City resources by discouraging noncontiguous development and urban sprawl;” and (2) “maintaining City’s unique rural character.” The court found, “The Density Restriction advances both goals by effectively freezing City’s urban service boundaries where they were drawn prior to March 1, 1990, thereby halting urban sprawl and minimizing the potential that adjacent farmland will be urbanized.”

The location and size of Arcadia’s parcel make it unique when compared to City’s other developable property. The court held that “prohibiting development of the Arcadia property for another 10 years is plausibly and rationally related to the public interest of halting urban sprawl and maintaining City’s rural character.” Arcadia’s interest is the only competing interest and the court found Arcadia’s interest “is implicitly accommodated by the fact that the [d]ensity [r]estriction will be subject to reevaluation when Measure C expires in 2020.”

City’s restriction of one dwelling per 20 acres was “not an arbitrary or discriminatory exercise of City’s police power or a violation of Arcadia’s right to equal protection.” The court found that “[g]iven the size of the property and its location on the southern edge of City adjacent to large swaths of unincorporated agricultural land, restricting development . . . bears a substantial and reasonable relationship to the public welfare goals of limiting the burden on City services and resources, discouraging noncontiguous development and urban sprawl, and maintaining City’s unique rural character.”


If you have any questions concerning the content of this Legal Alert, please contact the following from our office, or the attorney with whom you normally consult.

Jeffrey L. Massey | 916.321.4500

Jon E. Goetz | 805.786.4302