Last September we wrote about 616 Croft Ave., LLC v. City of West Hollywood, an opinion from the Court of Appeal for the Second Appellate District upholding a nearly $555,000 in-lieu fee on an 11-unit residential infill project because the fee was “related to the cost of constructing affordable housing units within the City.” Among other things, we noted that the case “underscores the ongoing need for the United States Supreme Court to finally address whether the heightened scrutiny of the Nollan, Dolan, and Koontz Fifth Amendment takings cases applies to legislatively imposed permit conditions.”
On December 21, 2016, the California Supreme Court denied a petition to review 616 Croft Ave., LLC. A petition for writ of certiorari was filed on March 15, 2017 (Case No. 16-1137), giving SCOTUS its opportunity to consider the case.
The petition begins by describing California’s pervasive affordable housing problem and the way the state has largely sought to address it:
In 1975, California’s Legislature declared that the lack of affordable low- and moderate-income housing posed a very serious threat to the region’s social and economic well-being. See California Bldg. Indus. Ass’n v. City of San Jose, 61 Cal. 4th 435, 441 (2015) (CBIA). The state’s efforts to address the affordable housing problem over the years, however, have been largely unsuccessful. Id. Faced with a continuing shortage of affordable housing, many local governments turned to so-called “inclusionary zoning” ordinances, requiring that developers dedicate a certain percentage of the new homes they build as low-income housing, or pay a fee in-lieu of the dedication. Id. Since first proposed, the “inclusionary zoning” strategy has been highly controversial because it relies on a permit condition as a tool to shift the burden of solving a pre-existing public problem onto an individual property owner as the “price” of obtaining an approval.
The petition explains that the petition should be granted for these reasons:
This case raises an important issue concerning the limitations that the Takings Clause of the Fifth Amendment of the U.S. Constitution places on a government’s authority to use the permit process to force private property owners to dedicate private property to a public use. In the decision below, the California Court of Appeal adopted a rule of federal law that allows the government to circumvent the nexus and proportionality analysis set out by this Court in Koontz [citation], Dolan, [citation], and Nollan, [citation], whenever the permit condition is required by an act of generally applicable legislation. Not only does the California decision depart from this Court’s unconstitutional conditions doctrine precedents, it deepens a long-standing split of authority among the lower courts regarding the scrutiny applied to legislatively mandated exactions.
The petition thus presents this question to the U.S. Supreme Court:
Whether a legislatively mandated permit condition is subject to scrutiny under the unconstitutional conditions doctrine as set out in Koontz v. St. Johns River Water Management District, 133 S. Ct. 2586 (2013); Dolan v. City of Tigard, 512 U.S. 374 (1994); and Nollan v. California Coastal Commission, 483 U.S. 825 (1987).
We have a keen interest in this critical issue, which is handled differently in lower courts throughout the nation, and will be tracking this new cert petition closely.
Questions? Please contact Bryan W. Wenter, AICP of Miller Starr Regalia.
For more than 50 years, Miller Starr Regalia has served as one of California’s leading real estate law firms. Miller Starr Regalia has expertise in all types of real property matters, including full-service litigation and dispute resolution, transactions, acquisitions, dispositions, leasing, financing, common interest development, construction, management, eminent domain and inverse condemnation, exactions, title insurance, environmental law, and land use. Miller Starr Regalia attorneys also write Miller & Starr, California Real Estate 4th, a 12-volume treatise on California real estate law. “The Book” is the most widely used and judicially recognized real estate treatise in California and is cited by practicing attorneys and courts throughout the state. For more information, visit www.msrlegal.com.