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By Gregg Kettles
Against the backdrop of a deepening affordable housing crisis in California, the U.S. Supreme Court recently declined to review a decision of the California Court of Appeal upholding the City of West Hollywood’s inclusionary zoning ordinance. The ordinance was challenged by a developer, 616 Croft Ave LLC (the “Developer”), who, after declining to provide the affordable housing units required by the ordinance, paid an in-lieu fee under protest. The Developer filed a lawsuit, claiming that the City’s ordinance is an unconstitutional condition/exaction and that the burden was on the City to prove the “reasonableness” of the fee under the Mitigation Fee Act and other authorities. The trial court ruled for the City and, in a published opinion, the court of appeal affirmed.
The court treated the Developer’s unconstitutional condition/exaction argument as a facial challenge to the ordinance and resolution adopting the fee schedule. The court held that such challenge was time-barred. Turning to the Developer’s as applied challenge under the Mitigation Fee Act, the court held that the Act did not apply here. Relying on the California Supreme Court’s decision in California Building Industry Association v. City of San Jose, the court held that the in-lieu fee was not an exaction, but rather a regulation of land use. The court of appeal further found that the in-lieu fee’s purpose is not to defray the cost of increased demand on public services resulting from the Developer’s project, but rather to combat the overall lack of affordable housing. The court of appeal upheld the judgment in favor of the City.
This article explains that Croft is not the revolution suggested by the Developer’s petition for certiorari and the six amicus briefs that argued for review by the nation’s high court. Croft closely followed San Jose, which upheld a nearly identical inclusionary ordinance in the City of San Jose. Inclusionary zoning is nothing new. Inclusionary zoning ordinances have been adopted in more than 170 California cities and counties, and hundreds more jurisdictions nationwide.
Read the Entire Article in the Real Property Journal

This article first appeared in California Real Property Law Journal VOL. 36, NO. 2, 2018. Republished with permission.

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