A Healdsburg family is suing their city government saying they were charged an unconstitutionally excessive $20K "inclusionary housing" fee before they could subdivide their existing duplex lot and build a new home for their family on one lot, while increasing the available supply of rental housing in the community on the other.
A Healdsburg woman has filed suit against her hometown government, saying the city unconstitutionally forced her and her husband to pay an "inclusionary housing" fee of more than $20,000 to get the permit and zoning needed to build a new family home and rent out a duplex.
On Sept. 5, Jessica Pilling filed suit in San Francisco federal court against the city of Healdsburg, accusing the city of charging unconstitutionally excessive development fees and essentially using its allegedly excessive regulations and fees to "take" her property.
Pilling is represented in the action by attorneys from the non-profit constitutional law organization, the Pacific Legal Foundation.
“You can’t make housing more affordable by making it more expensive, but that’s what cities like Healdsburg do when they impose so-called ‘inclusionary fees’ on residential development,” said David Deerson, an attorney at Pacific Legal Foundation, representing Pilling. “Fortunately, the Constitution prohibits the government from arbitrarily demanding property or money from developers, whether big firms or families like the Pillings.”
According to the complaint, Jessica Pilling and her husband, Chris, have lived in Healdsburg for years.
Healdsburg, which has a population about 11,000 people, is located in Sonoma County about 65 miles north of San Francisco.
According to the Pacific Legal Foundation, the Pillings operate several businesses in the community, including a "party bike" rental business.
In 2021, the couple sought to build a new larger home for them and their three children.
At the time, the couple lived in a duplex they owned on a 1/4 acre city lot.
Under the plan crafted in consultation with architects, engineers and other development professionals, the Pillings intended to take advantage of a new California law, known as SB9, to subdivide their lot, build a new single family house on the newly created lot, and then rent out both sides of the duplex to other residents.
Under SB9, California lawmakers explicitly gave permission to landowners to divide such small lots to allow for smaller dwellings to be constructed than may have been previously allowed under restrictive city zoning codes, with the goal of increasing housing supply and making housing more affordable.
However, to move the project forward, Healdsburg city government required the Pillings to either donate land to the city or pay more than $20,000 to satisfy a so-called "inclusionary housing" fee set up by city ordinance. According to information posted on the city's website, the fee is intended to support the city's overall goal of increasing housing for low- to moderate-income households.
Under the program, new planned developments with five or more "dwelling units" must make at least 20 percent of those dwelling units "affordable to low-, moderate- or middle-income households."
Those with four or fewer new dwelling units must pay the fee or donate land in lieu of the cash fee or build affordable units somewhere else in the city.
The Pillings had no alternative but to pay the fee, according to the complaint, and did so under protest.
They then joined with PLF to file suit, accusing the city of trampling their constitutional rights.
According to the lawsuit, the city's inclusionary housing fee regime violates the Fifth Amendment and transgresses three U.S. Supreme Court rulings. According to the complaint, those three decisions, taken together, establish that city development fees for new construction must be proportional and directly related to the impact caused by the new construction.
"Governments cannot burden homebuilders with costs for problems they do not create," the PLF said.
"Healdsburg’s requirements amount to an exorbitant ransom for permission to build much-needed homes. The City imposed an unfair burden on Jessica that was unrelated to her building plans and far more than her fair share toward addressing the city’s larger affordable housing problem."
The Pillings and their attorneys also pointed out that the city's fees also fail to account for the economic benefits of the Pillings project. By increasing housing in the community, the Pillings' project works to make housing more affordable, which they said should be in keeping with the city's goals.
"The City has it completely backward," the Pacific Legal Foundation said. "New residential development increases housing supply, which tends to lower housing prices."
The lawsuit remains pending, and the city has not yet filed a response.