Friday, June 7, 2013
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C.A. Tosses Ruling Striking Down Affordable Housing Law
By a MetNews Staff Writer
The Sixth District Court of Appeal yesterday reversed an order striking down a San Jose ordinance that would require developers to include units affordable to low and moderate-income buyers whenever they build new housing in the city, or pay in-lieu fees.
The court said builders may yet prevail on their challenge, but that Santa Clara Superior Court Judge Socrates Manoukian applied an incorrect standard when he invalidated the “citywide inclusionary housing ordinance” adopted by the city council in 2010.
The law would require developers to offer 15 percent of units in new projects of 20 or more units at below-market rates to persons with incomes of no more than 110 percent of the area median income. Alternatively, they could pay in-lieu fees based on the difference between median sale prices in the city and the cost of affordable housing for eligible households; The California Building Industry Association, which challenged the law, estimated the fee at about $122,000 per house.
Manoukian said San Jose had failed to show that new home construction creates affordable housing shortages. The judge wrote that such “reasonable relationships” are “constitutionally required.”
But Justice Franklin Elia, writing for the Court of Appeal, said the trial judge appeared to have erroneously applied case law dealing with housing mitigation and development impact fees.
Such fees, the justice explained, are viewed as a taking of private property under the California Constitution if they exceed the amount reasonably necessary to offset the deleterious effect of development. But the CBIA, he noted, “repeatedly emphasized” that it was not alleging a taking because it was asserting a facial challenge and the impact of the ordinance on individual developers was not before the court.
The trial judge, therefore, should have reviewed the ordinance under the substantially deferential standard applicable to the government’s exercise of police powers, Elia said.
“[T]his does not entail unthinking acquiescence to the City’s stated goals,” he wrote, but the plaintiff must show that the enactment is arbitrary, discriminatory, or unrelated to a valid public purpose.
“To the extent that evidence supplied by CBIA is material and relevant to its attack on the Ordinance, the trial court is entitled to review it under the proper standard,” Elia continued. “We will therefore remand the matter for that purpose. We again emphasize, however, that it is CBIA’s burden to establish the facial invalidity of the IHO, not the City’s to prove that it survives the challenge….We thus leave it to the superior court to determine whether CBIA has rebutted the presumption that the inclusionary housing conditions are reasonably related to the City’s legitimate public purpose of ensuring an adequate supply of affordable housing in the community. “
The case is California Building Industry Association v. City of San Jose (Affordable Housing Network of Santa Clara County), H038563.
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