A ruling arrived today from the California Supreme Court in a case that supports local ordinances, like the one we have in San Francisco, that requires developers of new market-rate housing to set aside some percentage of the units as affordable or to build affordable units off-site or donate to the city's affordable housing fund. A San Jose case, brought by the California Building Industry Association, challenged the 15-percent affordable requirement there, which took effect in 2010. But as the LA Times reports, the court ruled unanimously Monday that "There is no reason why a municipality may not ... [require] new developments to set aside a percentage of its proposed units for sale at a price that is affordable to moderate or low income households."
As the San Francisco Chronicle earlier reported, the developers' trade association has been looking to weaken such laws, question their constitutionality, and to require cities to conduct an economic analysis on a building-by-building basis to determine what negative impact each development might have on affordability in order to justify the requirement.
A state appeals court had already sided with the city of San Jose in this case, and the city's attorneys argued that such laws are basically "a land-use restriction that is well within its authority to enact."
Some 200 municipalities statewide have similar laws, called "inclusionary housing" ordinances. Since 2002 San Francisco has been requiring developers, or providing incentives to them, to build a percentage of below-market-rate units in each development or pay an in-lieu fee to the city. Developers last challenged such laws in a case based in Los Angeles in 2009 related only to rental units. A decision in that case, which sided with developers, forced San Francisco to rewrite its inclusionary ordinance to focus on the in-lieu fee, and to have developers build 12 percent BMR units on-site or 20 percent BMR units off-site as an alternative to paying the fee.
When Governor Jerry Brown dismantled the statewide redevelopment program in 2011, in which cities were able to provide what was called tax-increment financing to developers to help aid in the construction of affordable housing, it removed a key tool and financing source to make affordable construction economically feasible.
As of 2014, Mayor Lee put a non-binding resolution on the ballot which makes the development of 30 percent affordable units a citywide goal in SF but as many critics have pointed out, we are a long way from achieving that, and this is, in the end, just a "pinky swear."
Attorney Thomas B. Brown, who represented California’s cities and counties in the case, called today's ruling “a ringing recognition” that "these kinds of laws are really land use laws," and not, as the Building Industry Association was arguing, an unconstitutional “taking” of private property.
This story has been updated throughout.