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California Supreme Court Upholds San Jose’s Inclusionary Housing Ordinance against Constitutional Challenge

June 15, 2015
Today the California Supreme Court issued its decision in California Building Industry Association v. City of San Jose, in which the Court held that San Jose’s inclusionary housing ordinance was not a taking of private property for public use under the California or federal constitutions.
 
In January 2010, the city adopted an ordinance imposing a citywide inclusionary housing program. The program applied to all residential for-sale developments and required that 15 percent of the units be made available at an affordable housing cost to households earning no more than 120 percent of the area median income for Santa Clara County adjusted for household size. As an alternative to providing the required number of affordable units, a developer had the options of constructing off-site affordable for-sale units, paying an in-lieu fee, dedicating land equal in value to the in-lieu fee, or acquiring and rehabilitating a comparable number of affordable units. As incentives for providing the affordable units, the developer could apply for a density bonus, a reduction in the number of parking spaces, a reduction in the minimum set-back requirements, and financial subsidies and assistance from the city.
 
In upholding the ordinance, the Court noted that the ordinance does not require a developer to give up a property interest for which the city would have been required to pay compensation under the state and federal takings clause. Nor does the ordinance require a developer to dedicate any portion of its property to the public or to pay any money to the public. Rather, the Court concluded, the ordinance simply places a restriction on the way the developer may use its property, like many other land use regulations. Thus, the ordinance falls within the City’s broad discretion to regulate the use of real property to serve the legitimate interests of the general public and the community at large.
 
The Court’s opinion recognizes that cities have broad authority over land use regulation and may place conditions on development under the police power to protect the public health safety and welfare. Although this case only addressed inclusionary housing, it will provide helpful support in other areas of land use regulation.
 
The League wishes to thank Tom Brown of Burke Williams & Sorensen for drafting the League’s friend-of-the-court brief in this case.


 
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