Appeals Court Rules Church Can Sue City over Zoning Dispute

A lawsuit filed against the city by one of its biggest churches could be headed to court after a ruling by a federal judge. 

On Tuesday, the Ninth U.S. Circuit Court of Appeals cleared the way for a court battle between  and the City of San Leandro over the city's denial of a rezoning permit for a new church in an industrial area. The ruling reverses a lower court's decision in favor of the city.

"We’re very pleased about the precedent this has set," said Kevin Snider, chief counsel for the Pacific Justice Institute, which argued the case for Faith Fellowship.

He said the decision could have wide-ranging effects for other religious organizations seeking to establish themselves in areas with restrictive zoning regulations.

Gary Mortara, senior pastor at the church, said he was happy about the decision but wished the matter could have been settled without a lawsuit.

“I never wanted to get in a fight with the city,” Mortara said. “But I knew that what they were doing was not right and legal and fair.”

The conflict began in 2006 after Faith Fellowship signed an agreement to purchase two properties on Catalina Street off Farallon Drive with the intent to relocate. The church, which has more than 2,000 members, had outgrown its current location on Manor Boulevard. Traffic congestion and parking had become increasingly problematic, Mortara said. 

The church’s new site, however, was located within an area zoned for industrial and technological use and off limits to "assembly uses," such as private or non-profit clubs, lodges or religious organizations. 

While the property was in escrow, the church held talks with the city about rezoning the area. The city advised the church to apply for a change in the zoning law and an amendment to the zoning map to allow for assembly use at the Catalina Street site, according to the facts laid out in the federal appeals court ruling (see attached). 

The city did change its zoning laws in March 2007, but the change didn’t apply to the Catalina Street property. Instead, it identified 196 other properties where assembly use could be permitted.

At the time, the church had already closed escrow on the Catalina Street property, saying it couldn’t delay the process any further. The down payment was nearly $54,000.

The church also argued–and still does—that the Catalina Street property is the only site in the city that is suitable for its expansion. 

The church appealed the city’s decision not to rezone the Catalina Street property, but the city denied the appeal. It argued that the property didn’t meet all of the criteria laid out in the new law, notably, that it not be located within an area designated by the city as a strong industrial district, and therefore, a potential important source of tax revenue.

As non-profit organizations, churches and religious organizations are exempt from paying various taxes.

Faith Fellowship sued the city soon afterwards.

The church claimed the city violated its First and Fourteenth Amendment rights along with a federal law, the Religious Land Use and Institutionalized Persons Act of 2000, designed to protect religious institutions from overly burdensome land use regulations. 

A district court rejected the case in 2008, saying Faith Fellowship hadn’t proved that the city’s zoning actions amounted to a substantial burden for the church.

Tuesday’s federal appeals court ruling reverses that decision, sending the case back to district court.

City Attorney Jayne Williams said the city now has to decide whether to take the case up on an appeal.

“We’re analyzing the decision carefully and we’ll be talking to City Council in closed session next week,” she said.

Williams said the city had spent somewhere between $200,000 and $500,000 on the case since 2006.

Faith Fellowship sold its Catalina Street property last year. Mortara said the church couldn’t afford the $40,000 per month upkeep costs and mortgage payments. He said the church lost more than $2 million from the sale because of declining property values. 

Mortara, who said he’s been a pastor at the church for 17 years, said moving to the Catalina Street property would have been a “win-win for everybody.”

He said he had “talked with everyone who’s anyone in this city” in order to avoid taking the case to court.

“We’re here to help the city,” he said. “We’re not trying to hurt anybody.”

Faith Fellowship is a branch of the International Church of the Foursquare Gospel, a Pentecostal denomination with nearly 60,000 churches and meeting places in 140 countries around the world, according to its website.