Friday, June 8, 2001
Appeals Court Upholds City Affordable-Housing Mandates
By a MetNews Staff Writer
City laws requiring developers to dedicate a portion of their projects to affordable housing do not unconstitutionally deprive the owners of their property, the First District Court of Appeal has ruled.
In a ruling that applies to the city of Napa but carries implications for cities around California, the court on Wednesday rejected a challenge to “inclusionary housing” laws that compel residential builders to reserve 10 percent of their units for low- or moderate-income residents.
The court action affirmed the Napa Superior Court, which sustained a demurrer by the city to a complaint brought by Home Builders Association of Northern California.
Key to the Div. Five ruling was the fact that Napa’s ordinance allows developers to seek a waiver of the requirements while offering significant benefits, such as expedited processing and increased density, for those who comply.
First rejecting the plaintiff’s assertion that Napa bore the burden of proving its ordinance facially valid, Presiding Justice Barbara J.R. Jones added that the law substantially advanced a legitimate state interest—providing affordable housing in a region in which manual laborers who work in the wine and leisure industries live in substandard housing, workers are compelled to commute to work over long distances and more families are becoming homeless.
Heightened standards of scrutiny that require a nexus or proportionality between the requirement and the impact of the development apply to instances in which a particular landowner enters into an agreement with the city over the project, Jones said. That’s not the Napa case, in which the ordinance applies equally to all developments, she said.
The presiding justice also rejected the plaintiff’s assertion that the ordinance should be stricken due to the city’s own past restrictive policies, which allegedly caused the caused the housing shortage to begin with.
“HBA has not cited any authority to support the proposition that a zoning ordinance which tries to solve problems caused by prior legislative decisions is invalid, and case law is directly to the contrary,” Jones said. She cited the famous 1978 U.S. Supreme Court case upholding New York City preservation laws.
“If New York can enact a landmark preservation law to remedy a shortage of historic buildings created by its prior policies, City can enact an inclusionary zoning ordinance even if its prior policies contributed to a scarcity of available land and a shortage of affordable housing,” the presiding justice said.
Jones also rejected the plaintiff’s due process argument that the law improperly deprived it of a fair return on its investment.
“We doubt seriously that HBA is entitled to a ‘fair return’ under the due process clause,” Jones said. “The ‘fair return’ standard is commonly used to evaluate restrictions placed on historically regulated industries such as railroads and public utilities. It has also been used to evaluate rent control ordinances. However HBA has not cited, and we are not aware of, any case that holds a housing developer is entitled to ‘fair return’ on his or her investment.”
Nor, Jones said, does the Napa ordinance run afoul of Proposition 218, the 1996 constitutional amendment that restricts new fees and taxes.
The developer argued that the option to pay a fee in lieu of complying with the requirement to set aside affordable units rendered the whole ordinance invalid because it was a fee not approved by a vote of the populace. But Jones said that very argument was rejected by the state Supreme Court earlier this year in a case challenging the city of Los Angeles’ ordinance imposing a $1 per unit inspection fee on apartment owners.
Taxes, assessments, fees and charges are subject to the vote requirement of Proposition 218 only when they burden landowners as landowners, the high court said, and not when it applies to a business—the business of being a landlord.
The same analysis applies to the Napa law, Jones said. The in-lieu fee option comes into play only when a landowner chooses to develop the property.
The case is Home Builders Association of Northern California v. City of Napa, 01 S.O.S. 2710.
Copyright 2001, Metropolitan News Company