The owners of 1900 Fourth St. sued Berkeley over the city’s denial of their SB35 housing application. The law allows almost automatic approval of complexes where 50% of the units are “affordable.”

An Alameda County Superior Court judge is deciding whether the city of Berkeley illegally quashed a 260-unit housing development on the old Spenger’s parking lot.

After hearing arguments during a three-hour court meeting Friday, Judge Frank Roesch said he’d issue a ruling in “due course,” saying the decision was “not an easy one.”

The lawsuit deals with a new state law, SB35, which requires cities to fast-track approval of housing developments where at least half the units are for low-income residents. The state cannot override “objective standards” like local zoning laws, however.

Last year, developers West Berkeley Investors became the first in the state to invoke SB35, proposing the 260-unit complex where 130 units would be affordable. The site in question: 1900 Fourth St., where a previous mostly market-rate project proposal had been deeply controversial because the parking lot falls within the bounds of the landmarked West Berkeley Shellmound.

Rejecting the SB35 proposal — twice — the city argued that there were numerous reasons the development wasn’t eligible for approval under the state law.

City staffers said the application unconstitutionally took away Berkeley’s authority over its landmarks. They said the construction could destroy a historic structure — the underground Ohlone shellmound — a claim at the center of an extended, bitter fight that began long before SB35 was passed. The city also said the project didn’t comply with Berkeley’s requirements for “very low-income” units or its traffic standards, and argued that the state law just covers housing-only projects, not mixed-use complexes with shops and restaurants on the ground floor like the Fourth Street proposal.

Read more about 1900 Fourth St. and the West Berkeley Shellmound.

In August 2018, West Berkeley Investors walked away from the project. But the owners of the lot, Ruegg & Ellsworth and Frank Spenger Company, pushed forward with the plan, suing Berkeley in November for denying the SB35 application. The Confederated Villages of Lisjan, an Ohlone group, joined the city in the lawsuit.

The outcome of the case could have ramifications beyond the Fourth Street development, affecting future SB35 applications in Berkeley and beyond. In the meantime, the city has approved two other SB35 affordable housing projects, on Oxford Street and Berkeley Way.

In court on Friday, Ruegg & Ellsworth lawyer Jennifer Hernandez said the state law “usurped” Berkeley’s authority to nix the 1900 Fourth St. complex.

Subscribe to the Daily Briefing Don’t miss a story. Get Berkeleyside headlines delivered to your inbox. Don’t miss a story. Get Berkeleyside headlines delivered to your inbox.

“Here is a uniform state statute,” Hernandez said. “How uniform is it? The state doesn’t want local government interpreting how to apply it.”

SB35 is California’s answer to an urgent housing crisis, exacerbated, she said, by cities failing to approve new buildings and meet affordable housing requirements.

“The City will rarely, if ever, receive a better opportunity to reverse this shameful trend,” attorneys wrote in the lawsuit.

The judge told Hernandez to spare him the “platitudes about how there’s a housing crisis,” cautioning lawyers to focus on whether the letter of the law prohibited Berkeley from denying the specific application.

Shellmound debate rehashed

During the three-hour hearing, the city side of the Oakland courtroom overflowed with staff and supporters, including some Ohlone tribal members. The onlookers on both sides observed quietly.

Arguments generally dealt with granular specificities — the meaning of a particular comma in a law, or the implications of the city’s word choice in its rejection letters.

But the hearing also resurfaced an ongoing controversy about what exactly lies beneath the Spenger’s lot.

Many Ohlone representatives have said the site was once home to one of the Bay Area’s hundreds of sky-high piles of shells and bones that were often used by their ancestors as burial grounds. There has been extensive excavation of, and research into, the Spenger’s site, with the findings — groundwater with a thin layer of shells and other objects — suggesting the specific area was marshland, not a shellmound. But some, including attorneys Friday, have criticized the methodology and extent of the excavation, saying diggers needed to go much deeper. There have been arguments over various historical maps as well.

“This is the exact kind of demolition that’s occurred to the shellmound throughout all its history,” said attorney Thomas Lippe in court. “Now they’re planning to cart off the remainder.”

Hernandez said her clients are certain the site wasn’t a shellmound. But even if they weren’t, she said, building in the place of an existing parking lot wouldn’t require the “demolition of a historic structure” (which would allow the denial of the SB35 application). Her side argued that there is no “structure” to “demolish.”

“It’s like seeing a demolished building and saying, well, the wood’s still there,” Hernandez said.

“It would require the destruction,” countered Berkeley’s attorney Kevin Siegel. “Ground floor retail is necessarily going to be digging below ground and destroying this historic resource.”

Hernandez attempted to display maps of the area, which she said would prove her point.

An impatient Roesch told her that would be unnecessary.

“I’m familiar with the area,” he said. “I’ve been to Truitt & White hundreds of times. I used to go to Fourth Street for breakfast, but I don’t do that anymore.”

“Bette’s?” asked Hernandez.

“Yes,” the judge responded, eliciting chuckles from his audience.

The judge explained that the existence or non-existence of the shellmound wasn’t the point in this instance. Everything boiled down, instead, to whether the city genuinely believed the construction would destroy a historic structure or not. If so, he indicated, Berkeley might have been within its rights to deny the SB35 application.

Hernandez argued that was unlikely, given previous admissions by the city.

After the hearing, Corrina Gould, an Ohlone spokeswoman for the “Save the Shellmound” effort, said her lawyers did a good job explaining the importance of the site, and the judge struck her as fair.

As everyone filled out of the courtroom, Gould told Berkeleyside, “It’s a sacred site. The shellmound continues to be there, and the city of Berkeley has been protecting it for 20 years.”

Dana Ellsworth declined to comment on the case.

Is SB35 for commercial development too?

The hearing also addressed the variety of other reasons given by the city for denying the SB35 project.

While the development includes 130 affordable units — extremely rare for a private development — Berkeley has argued that the project fails to meet the city’s requirement for 20% of all units to be affordable, with half for very low-income tenants, unless developers pay a mitigation fee. Hernandez argued that the state law overrides those requirements, and said it would be prohibitively costly to build very-low-income units on top of the large number of low-income residences.

“We don’t think it’s appropriate for the city to say, you’re just like all the luxury apartments on University [Avenue], and you need to make 20%,” she said.

She said the fee issue should be worked out after the project is approved.

The sides also squabbled over whether SB35 can apply to mixed-use projects.

The state has never said it has or wants authority over the city’s commercial permitting decisions, city lawyers argued. And those decisions “could have significant impacts” on neighbors, be they approval of cannabis dispensaries or fragrant smoke-gushing barbecue restaurants, Siegel said.

Those businesses would still need to get licenses from the city, Hernandez responded.

“They can regulate adult bookstores or marijuana dispensaries,” she said.

Lawyers for the city said their denial of the SB35 application wasn’t, as Ruegg & Ellsworth were accusing, an outright rejection of the project. They could have put the same proposal through the traditional permitting process, they said.

Hernandez scoffed at that.

“If this is not approved under SB35, there’s not another project waiting to get approval,” she said. “The city kept the other [market-rate] project in the CEQA washing machine, as I call it, for three years,” she said, referring to the mandatory environmental review process.

Roesch said nobody should expect his ruling to put the matter to rest once and for all.

“Whatever the case is, I don’t make decisions about whether projects are approved, ever,” he said.

Natalie Orenstein reports on housing and homelessness for The Oaklandside. She was previously a reporter for Berkeleyside.