by Like other towns in California, East Palo Alto is subject to a rule that requires new housing project developers to pay for the state’s affordable housing deficit.
According to the city’s inclusionary zoning legislation, new residential projects must reserve a portion of the units they intend to construct for lower-income homeowners and renters. In lieu of that, builders who decline must pay a fee that can range from tens of thousands to hundreds of thousands of dollars.
With some assistance from the U.S. Supreme Court, an East Palo Alto homeowner filed a complaint in federal court on Thursday, arguing that the legislation was unconstitutional and comparing it to extortion.
The lawsuit’s ramifications extend well beyond the Bay Area. According to a 2017 research, 149 Californian cities and counties have some kind of inclusionary zoning law, however the exact definition varies. As a result, it is among the most widely utilized affordable housing initiatives in California and elsewhere.
All of it could now be at risk under the constitution.
Wesley Yu, a father and husband in between jobs, brought the action in federal court in San Francisco because he intended to construct a house and guest cottage in the backyard for himself and his extended family on a nearby property.
Yu was forced to sell or rent out one of the units at affordable rates or pay a one-time fee of $54,891 to be put in the city’s affordable housing subsidy fund since he intended to build two additional structures. This was due to the city’s inclusionary zoning regulations.
The libertarian Pacific Legal Foundation filed Yu’s complaint, which is based on a U.S. Supreme Court decision from the previous year that also sprang from a contentious housing issue in California.
George Sheetz, a septuagenarian from Placerville, filed the lawsuit, arguing that the El Dorado County administration had not done enough to support the $23,420 traffic levy that was imposed on his home construction project.
The Fifth Amendment of the U.S. Constitution, which places restrictions on when the government may seize private property, was cited in Sheetz’s case. According to decades’ worth of court decisions, a local government must directly link the expenses of the development to any conditions it wishes to impose on the acceptance of a construction permit.
For instance, if a developer pays an environmental cleanup charge but not a fee to support local arts and recreation, the city may be able to delay licensing a new landfill.
Additionally, courts have decided that these restrictions on private growth have to be roughly commensurate with their price. In other words, the $23,420 that El Dorado County sought to charge Sheetz ought to be equal to the price of repairing the damage his new residence would cause to the neighborhood’s roads.
The Supreme Court concurred that the impact fee should be subject to these criteria.
A federal judge is now being asked by Yu and his legal team to apply the same rule to inclusionary zoning. The city would need to demonstrate that the $54,891 fee or the need to set aside new units at a discount is related to and equals the cost that Yu’s development would impose on the city in order for East Palo Alto’s program to pass constitutional scrutiny.
David Deerson, Yu’s lead attorney, stated that the city would not be able to prove that.
The affordability of housing is not negatively impacted by new residential development. He claimed that it has a beneficial effect, if anything.
It is true that local market-rate growth drives down neighborhood and citywide rents, according to an expanding corpus of economic data.
Affordable housing in California zoning
California courts have already held that inclusionary zoning initiatives like the one in East Palo Alto are exempt from the Fifth Amendment’s high constitutional bar. The courts have determined that requiring private developers to provide some more affordable housing is a normal land-use limitation, similar to any other zoning regulation, rather than an exaction.
According to Mike Rawson, director of litigation at the Public Interest Law Project, a city has broad constitutional authority to determine that it needs more affordable housing, schools, apartment complexes, businesses, or, in the case of inclusionary zoning, affordable housing for the sake of the general welfare.
The most recent ruling in this regard was made by the state Supreme Court in 2015. In a tacit endorsement, the U.S. Supreme Court chose not to comment.
“They can always decide to change their mind,” Rawson remarked. Obviously, that doesn’t stop them, but I don’t see any justification for it.
Since 2015, the court’s makeup has shifted significantly to the right. Last year’s Sheetz ruling provided fresh material for legal challenges to inclusionary zoning.
According to Deerson, Sheetz is a huge help here with that campaign. He mentioned additional difficulties in Denver and Tennessee County, Wyoming. I anticipate that they will continue to arrive.
Tradeoffs in housing policy
The nation’s top court will be entering one of the more contentious discussions in housing policy if and when it decides to take up the inclusionary zoning issue.
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There is conflicting evidence regarding these laws’ effects. At no additional expense to taxpayers, requiring private developers to construct affordable units can and frequently does lead to more local housing options for lower-income residents. Supporters contend that they help foster racial and economic integration by placing market-rate and cheap units next to each other.
However, inclusionary criteria can also reduce the profitability of a particular housing project by preventing the construction of as many units, which raises prices and rents generally. Additionally, the rate at which these programs add designated affordable units to the housing stock is relatively modest in housing markets with relatively limited new development, such as California’s.
The legal case, which will be fought and won over impersonal constitutional principles, is unrelated to that policy argument. However, ending inclusionary zoning would benefit many Yes In My Backyard home development advocates, building industry associations, and libertarian-leaning organizations like the Pacific Legal Foundation.
According to Deerson, these inclusionary zoning laws are not only unlawful but also blatantly foolish.
CalMatters is a nonprofit, nonpartisan news company that holds our officials accountable while providing Californians with articles that examine, clarify, and consider solutions to problems affecting their quality of life.
