Karen Kidd Apr. 26, 2016, 3:14pm

SAN JOSE – The U.S. Supreme Court's decision in late February not to hear a challenge to a San Jose-mandated affordable housing law has effectively ended that challenge, a Pacific Legal Foundation official said in an interview.

"Yes, sadly, it is done and over with," PLF Director of Litigation James Burling told the Northern California Record.

The high court's refusal of the case came with Justice Clarence Thomas warning that the law remains an unsettled legal gray area and that the issue remains open to interpretation.

 "Until we decide this issue, property owners and local governments are left uncertain about what legal standard governs legislative ordinances and whether cities can legislatively impose exactions that would not pass muster if done administratively," Thomas said in the opinion he penned for the high court. "These factors present compelling reasons for resolving this conflict at the earliest practicable opportunity."

Thomas also said that the case failed over technicalities.

"Yet this case does not present an opportunity to resolve the conflict," he wrote. "The city raises threshold questions about the timeliness of the petition for certiorari that might preclude us from reaching the takings-clause question. Moreover, petitioner disclaimed any reliance on Nollan and Dolan in the proceedings below. Nor did the California Supreme Court's decision rest on the distinction (if any) between takings effectuated through administrative versus legislative action. Given these considerations, I concur in the court's denial of certiorari."

Thomas noted lower courts have for two decades been divided over the question in cases, including the Nollan and Dolan cases, in which plaintiffs challenged administrative actions on land use.

The San Jose case was sparked by a 2010 ordinance enacted by San Jose that mandated new residential developers building 20 or more units to market at least 15 percent of those units at a price affordable to low- to moderate-income families. Before the law took effect, the California Building Industry Association filed a lawsuit alleging the city of San Jose had failed to show that such developments, without the mandate, would exacerbate the city's affordable-housing problem.

PLF attorneys represented the California Building Industry Association pro bono, according to a PLF press release.

The ordinance penalized homebuilders and raised overall home prices by forcing developers to sell a percentage of units at below-market residences or else pay into a city housing fund, the press release said.

Last summer, the California Supreme Court found in favor of the city of San Jose, finding the city's ordinance was within the city's discretion in service of legitimate public interests. The following September, the PLF announced on behalf of the California Building Industry Association that the case would be appealed to the U.S. Supreme Court. The U.S. Supreme Court's refusal to hear the appeal was announced in February.

As Thomas pointed out, the problem remains, Burling said.

"The problem is that this only increases the cost of market-rate housing, making the problem worse," Burling said. "And, in answer to your question, it is a trend that’s spreading across the nation. It has reared its head from New Jersey to California, and Louisiana to Chicago. And with the bizarre California Supreme Court opinion here left untouched by the Supreme Court, the problem will get worse before it gets better."

Consequently, the PLF would be interested in supporting similar litigation, Burling said.

"We’d love to take on more of these cases, but to get one to the Supreme Court we’ll need an actual developer with an actual housing project that’s being subjected to these affordable housing mandates," Burling said. "The problem is that most developers are rational pragmatic business people. They know how difficult it is to get permits in the first place, so they are usually happy just to get a permit and will pass on the costs of any unreasonable conditions onto the home buyers. Developers also know that to get a project approved, they must pass many, many inspections and require many interim permitting steps. They really don’t want to get on the wrong side of the regulators by suing the local government over affordable housing mandates."

There are problems inherent in similar cases in which plaintiffs are not developers, Burling said.

"Sure, we can sometimes get a building association, like CBIA in this case, to file suit," Burling said. "But those suits have inherent ripeness problems, which was enough for the Supreme Court to turn down this case. We really need to have a developer willing to go to the mat with an actual application of one of these mandates."

Want to get notified whenever we write about any of these organizations ?
Next time we write about any of these organizations, we'll email you a link to the story. You may edit your settings or unsubscribe at any time.

Organizations in this Story

Pacific Legal Foundation
930 G Street
Sacramento, CA 95814

City of San Jose
San Jose City Hall, San Jose, CA, United States
San Jose, CA 95112

More News