The City of Santa Ana (City) has recently undertaken an ambitious — and highly controversial — effort to reshape the landscape of its historically industrial-centric Transit Zoning Code (TZC) district. Through the adoption of a development moratorium and the introduction of Zoning Ordinance Amendment (ZOA) No. 2024-02 (the Zoning Code Update), the City has sought to restrict, phase out, and ultimately eliminate industrial uses within the TZC area. Together, these legislative tools illustrate a growing trend among municipalities to leverage interim ordinances and zoning amendments as instruments of long-range planning, often to the detriment of long-established industrial users. Similar efforts have been pursued in recent years by a number of other Southern California cities – including Pomona, Redlands, Rialto, Pico Rivera, Rancho Cucamonga, and Lynwood – through the use of zoning overlays, targeted use restrictions, and industrial moratoria. This list is not exhaustive, but reflects a broader regional shift in policy toward phasing out legacy industrial activity.

This article examines the legal underpinnings of the City’s approach, with particular focus on the statutory limits governing moratoria, the erosion of legal nonconforming rights under the Zoning Code Update, and the vested rights framework that enabled certain property owners to successfully defend against overreach. For landowners, developers, and practitioners across California, the City of Santa Ana case study offers timely insights into the risks — and opportunities — of navigating land use regulations in a shifting policy landscape.

DEVELOPMENT MORATORIA AS PLANNING TOOLS AND THEIR LEGAL LIMITS

A growing trend has emerged among Southern California municipalities: the use of moratoria to freeze industrial development while more permanent land use regulations are drafted and baked into existing zoning codes. Many cities have expressed concern that their industrial zoning codes — often decades old — are no longer equipped to address the intensity, scale, and externalities associated with modern warehousing and logistics operations. Often styled as temporary “pauses,” these moratoria are increasingly being deployed to sidestep political or procedural delays in controversial rezonings. The City’s approach is emblematic of this shift.

In April 2024, the City adopted Urgency Ordinance No. NS-3063, establishing an immediate 45-day moratorium on industrial use approvals in the TZC area. The urgency measure term was initially extended to April 15, 2025 via the City’s adoption of Ordinance No. NS-3064, ostensibly to provide the City with time to “alleviate conditions” associated with industrial impacts on surrounding neighborhoods. Yet, in practice, the moratorium functioned less as a temporary regulatory pause and more as a de facto blanket ban on industrial activity blocking even ministerial permits for minor tenant improvements and routine facility upgrades for existing facilities. In some jurisdictions, such as Pomona, staff went even further — interpreting local moratoria as grounds to withhold business licenses altogether, compounding the regulatory chilling effect.

While cities are authorized by State law to impose interim ordinances under California Gov. Code § 65858, that authority is narrowly tailored. Subsection (a) requires a city to make express findings that “there is a current and immediate threat to the public health, safety, or welfare,” and that the approval of certain land uses “would result in that threat to public health, safety, or welfare.” These findings must be supported by specific and demonstrable facts, not merely policy preferences or speculative concerns. Notably, establishing a moratorium requires a higher approval threshold (a four-fifths vote), yet many cities routinely adopt moratoriums without adequately substantiated findings meeting this elevated standard.

Moreover, Gov. Code § 65858(c) limits extensions (moratoria may be in place for up to a maximum of two years) of interim ordinances to cases where the city adopts “new findings” evidencing continued urgency. Courts have interpreted this to mean that local governments may not simply recycle generalized concerns from the original ordinance; instead, they must produce fresh and substantial evidence justifying continued restrictions. As one court observed, the power to adopt moratoria “must not be used as a subterfuge to accomplish through interim action what would otherwise require permanent legislation subject to full procedural safeguards.” (See San Diego Gas & Electric Co. v. City of Carlsbad (1998) 64 Cal.App.4th 785, 792.)

The City’s blanket application of its moratorium — even to longstanding industrial businesses performing non-expansion work — ultimately tested the boundaries of lawful urgency regulation. In practice, we have observed in multiple jurisdictions that planning and building department staff frequently misapply moratoria by freezing all permit activity, regardless of whether a proposed action would establish a new industrial use or expand or intensify an existing one. This overreach leads to delays for purely ministerial work, such as tenant improvements, equipment upgrades, or basic maintenance for long-standing businesses, even when no land use intensification is proposed.

Such was the case for Adams Iron Co., whose long-operating facility at 811 N. Poinsettia Street was denied a ministerial permit for internal dust collection upgrades during the moratorium period. Allen Matkins submitted a formal letter to the City Attorney on September 4, 2024, later covered by various media outlets, arguing that the City’s refusal to issue the permit violated Adams Iron’s vested rights under California law. The letter cited long-standing case law, including Avco Community Developers, Inc. v. South Coast Regional Com. (1976) 17 Cal.3d 785, and emphasized that Adams Iron had expended significant resources in reliance on existing zoning and permits. The City’s blanket denial, we argued, was not only unsupported by the moratorium’s express terms but also exposed the City to potential liability for unconstitutional takings and inverse condemnation.

Ultimately, the City relented. Adams Iron received its permit — one of the few granted during the moratorium — illustrating how careful legal positioning and a clear articulation of vested rights can successfully overcome unlawful regulatory applications.

This episode illustrates a broader caution: moratoria are not planning shortcuts. They are statutory tools of last resort, meant to address genuine emergencies — not a means for incrementally phasing out disfavored uses without going through appropriate legislative processes.

REZONING AND THE EROSION OF NONCONFORMING RIGHTS

While the moratorium temporarily paused industrial activity in the City’s TZC area, the City simultaneously moved to make such restrictions permanent through a sweeping legislative overhaul. Specifically, the City initiated the Zoning Code Update, consisting of Zoning Ordinance Amendment (ZOA) No. 2024-02 and Amendment Application (AA) No. 2024-03. These measures proposed major revisions to permitted land uses, nonconforming use regulations, and operational standards within the TZC.

The centerpiece of the Zoning Code Update is a dramatic reclassification of large swaths of formerly industrially zoned land — including M1 (Light Industrial) and M2 (Heavy Industrial) designations — into a newly created “Urban Neighborhood” zoning. Industrial uses are no longer permitted under the Urban Neighborhood zoning designation and existing industrial businesses (including standard warehousing) are reclassified as legal nonconforming uses, subject to heightened scrutiny and eventual phase-out.

Among the most concerning features of the Zoning Code Update were:

• Amortization provisions allowing the City to forcibly terminate nonconforming uses after an undefined “reasonable” period.
• Transfer restrictions that prohibit the continuation of a nonconforming use upon sale or lease to a new operator, effectively undermining financing, succession planning, and property value.
• Operational standards that retroactively impose new noise, environmental, and performance obligations on existing businesses.

These mechanisms pose an existential threat to industrial operators. As California courts have long recognized, the right to continue a legal nonconforming use is a “vested right that runs with the land” (Edmonds v. County of Los Angeles (1953) 40 Cal.2d 642). By conditioning continued operation on an arbitrary amortization timeline or restricting successor use rights, the Zoning Code Update risked unlawfully extinguishing these protected interests.

Equally problematic was the City’s attempt to justify the Zoning Code Update by relying on its Transit Zoning Code Environmental Impact Report (EIR No. 2006-02), certified in 2010. That EIR was prepared 15 years ago and does not evaluate the displacement, cumulative socioeconomic, or environmental impacts of a wholesale elimination of industrial land uses. Nevertheless, the City merely prepared an addendum to that EIR, claiming that the proposed changes fell within the scope of prior review under CEQA Guidelines section 15162.

Allen Matkins, on behalf of multiple affected property owners — including Adams Iron — submitted formal comment letters, provided public testimony, and engaged in direct negotiation with City staff to raise legal concerns with the procedural and substantive adequacy of the EIR addendum and the substantive legal risks embedded in the Zoning Code Update.

While these advocacy efforts did not halt the Zoning Code Update entirely, they produced meaningful improvements. The City ultimately incorporated several clarifying provisions and exceptions in response to public comments — including a more flexible approach to abandonment determinations, refined amortization language, and narrowly tailored allowances for specific industrial sites. These changes significantly reduced the burden on our clients and preserved key operational rights.

With the City Council scheduled to vote on final adoption of the Zoning Code Update on May 5, 2025, continued attention is warranted. The City’s approach illustrates the increasing use of comprehensive rezoning as a policy tool to phase out disfavored uses. For industrial property owners, it also underscores the importance of early engagement, robust legal analysis, and clear documentation of vested rights when facing existential regulatory change.

TERMINATION OF THE MORATORIUM AND LESSONS LEARNED

Faced with vocal opposition and detailed legal scrutiny, the City Council surprisingly allowed the moratorium to expire on April 15, 2025, after failing to achieve the required statutorily required four-fifths vote for extension. This termination represented a significant legal victory, validating the arguments advanced by businesses and highlighting the necessity for municipal transparency and statutory adherence.

City Council recently adopted the permanent Zoning Code Update for the Transit Zoning Code (TZC) area on June 3, 2025, after introducing several last-minute amendments during the public hearing. We are actively assisting clients in navigating the newly enacted regulations, interpreting their impacts, and developing strategies to protect vested rights and maintain operational continuity.

Looking forward, the City is now in the initial stages of stakeholder outreach and drafting a broader Comprehensive Zoning Code Update. Unlike the TZC update, this forthcoming comprehensive revision will affect zoning citywide, impacting property owners and businesses throughout Santa Ana. Businesses and property owners should proactively engage in this planning process, clearly document and assert their vested rights, and remain prepared to leverage precise legal arguments grounded in statutory compliance and constitutional protections. Continued vigilance will be essential to successfully navigating these extensive zoning reforms.

PRACTICAL IMPLICATIONS AND FORWARD–LOOKING GUIDANCE

The City of Santa Ana’s recent experiences offer critical insights:

• Municipalities must strictly adhere to statutory standards: Property owners should scrutinize local governments’ "findings" supporting urgency ordinances, challenging vague or insufficient evidence.
• Documentation of vested rights is crucial: Clear records demonstrating continued use and permits become essential to asserting constitutional and statutory rights against municipal overreach.
• CEQA compliance matters: Advocating against reliance on outdated EIRs ensures legally adequate environmental review and protects against arbitrary zoning amendments.

In navigating similar municipal strategies elsewhere, proactive and assertive legal engagement remains critical. As municipalities increasingly adopt aggressive planning tools, particularly those targeting industrial uses, businesses and property owners must remain informed and strategically prepared to defend their vested rights.