Whitney Wright May 3, 2016, 6:16pm

SAN JOSE – A recent petition for writ of certiorari was denied by the U.S. Supreme Court in a continuing battle against inclusionary zoning involving the California Building Industry Association (CBIA) and the city of San Jose.

Inclusionary zoning, in which developers are required to provide some of their units as low or moderate-income housing, is supported by more than 170 jurisdictions in California. The city of San Jose has put an ordinance into place that requires new residential developments with 20 or more units to provide at least 15 percent of the for-sale units for inclusionary housing.

Many developers and property rights advocates, however, are still unwilling to comply.

Multiple lawsuits to limit or even eliminate inclusionary zoning have been brought against the government, even though the government generally offers discounts on fees and density bonuses allowing the construction of more units when a location is required to abide by inclusionary zoning.

“What it's really all about is a struggle by property rights advocates to get more legal protection for a stronger set of rights,” Professor Tim Iglesias of the University of San Francisco, an expert on housing laws, told the Northern California Record.

Through exaction, a condition put in place by the government on a parcel of land requiring that the developer alleviate negative impacts of the new development, the government is allowed to apply these inclusionary zoning conditions. Developers and property rights' advocates who are against inclusionary housing, however, often seek to find that the government has overstepped its exaction authority, thus turning the condition into unconstitutional taking. They cite the outcomes of two cases concerning government-enacted property requirements now known as Nollan/Dolan.

Simply put, in these cases the government was found to have attempted to require particular public land usage from private owners, but did not have viable evidence of an “essential nexus” and “rough proportionality” through the condition, or viable evidence supporting that dedication of the proposed section of property to public use that would mitigate the negative impacts of the overall new development on the community. 

The cases are often referenced and used in property law challenges to identify if the government is asking too much of a developer.

A debate exists in lower courts about whether conditions apply to only administrative property actions or if they could also be used in cases concerning legislative acts, such as the one between the CBIA and the City of San Jose.

“The unresolved question that Justice (Clarence) Thomas mentions in his concurrence in the U.S. Supreme Court’s denial is that this issue with exactions and when a government regulation is an exaction, and when it needs to meet these Nollan/Dolan tests, is unresolved in terms of the country,” Iglesias said.

He said people are still trying to figure out “whether or not those rules actually apply when the local government is applying a particular ordinance to a particular development in what’s called an administrative hearing or administrative process, or whether those rules also apply to legislatively enacted statutes.”

The Pacific Legal Foundation, a private property rights law firm assigned to the case after the plaintiff lost the original trial, attempted to bring the case to the Supreme Court as a vehicle for the ongoing concern with the proper utilization of Nollan/Dolan through a facial attack, which claims that the ordinance is unconstitutional. 

However, an appellate court, and the Supreme Court all sided against hearing the case again. They found that it was not only a normal land use regulation - in which price control is being used to achieve what the local government wants - but also that the case did not meet their needs for the development of Nollan/Dolan.

“When the U.S. Supreme Court denied review that really meant that, as far as it goes for now, that is the law at least in California. And so, therefore, other governments will feel comfortable moving forward, enforcing ‘for sale’ inclusionary housing if they already have that, or now adopting that if they don’t have it already,” Iglesias said.

Now, the Foundation must find new ways to present the case. Though it can be brought forth as an as-applied challenge, which would state that the requirement is unconstitutional in a particular way to the Association or their property, the plaintiff may have more success by finding another case that better exemplifies inclusionary zoning ordinances as exactions or regulatory taking, and enticing the Supreme Court to reconsider the ordinance.

Through that case, the California Building Industry Association may have a chance to stop the ordinance from affecting its new developments.

“So they haven’t by any means given up, and they will continue to bring claims to challenge inclusionary zoning,” Iglesias explained. “But for now, at least on ‘for sale’ inclusionary zoning, the local government has won for now. It’s up to the challengers to figure out how to attack it from a new basis or in a way that might win.”

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Organizations in this Story

University of San Francisco
2130 Fulton St
San Francisco, CA 94117

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

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