California lawsuit demands end of “’inclusionary zoning’ it calls ‘extortionary’
(The Center Square) – One moderate-income California family trying to build two new homes on its property was slapped with a $20,000 “inclusionary zoning” fee the City of Healdsburg says its necessary to improve housing affordability, provided that the family neither wanted to give the city land for price-controlled housing, or sign a 55-year price guarantee on the housing they are building. Now that family is suing for an end to “inclusionary zoning” fees it calls “extortionary zoning” by taking the case to court.
“Inclusionary zoning” is the practice by which cities require new construction to pay large fees or include or financially support the construction of price-controlled “affordable” housing.
Jessica Pilling and her husband, who have three children, live in a duplex and opted to use a new California law to split their quarter-acre lot and build two more units — a primary house for their family to live in, and an accessory dwelling unit to rent out, which would allow them to put their whole duplex on the rental market. If completed, the Pillings’ project would increase the local housing supply.
The city has had an “inclusionary zoning” mandate in effect since 1996 that applies to projects of more than one home, whereby builders have the option of paying a large fee for deposit in the city’s “affordable” housing construction fund, provide land for affordable housing construction for the city, build “affordable” units on another site, convert existing market-rate units to “affordable” units, build an additional “affordable” single-family home and ADU, or set aside units as “affordable” for 55 years.
The Pillings, who by their moderate income qualify to live in “affordable” housing, paid the $20,000 “inclusionary zoning” fee under protest, while paying an additional $60,000 in fees without protest; their lawsuit notes because the income-qualifying Pillings “intend to occupy the new unit themselves, the project literally provides affordable housing on its own.” To avoid the fee, the Pillings say they even offered to rent out one of their duplex’s units at below-market rates, to which the city did not agree.
The Pillings’ lawsuit, represented at no cost by the Pacific Legal Foundation, a libertarian legal nonprofit, claims the city violates two major cases that require the city to prove an “essential nexus” for their fee — in this case, that the fee has something to do with whether or not the Pillings’ new housing would make local housing more expensive — and that the fee is “roughly proportionate” — that is, if the fee assessed is proportional to any potential decrease in housing affordability.
New housing is proven to decrease housing prices by increasing housing supply, a fact the Pillings’ lawsuit uses to claim the city’s fee is an unconstitutional “taking” that fails the nexus and proportionality tests established by the United States Supreme Court.
“The City contends that new housing worsens housing affordability, necessitating land or money to offset these supposed negative impacts,” wrote the PLF in a statement on the case. “The City has it completely backward: New residential development increases housing supply, which tends to lower housing prices.”
As reported by the Healdsburg Tribune, City Manager Jeff Kay said, “This lawsuit is a challenge to inclusionary housing policies, which are authorized under State law, and widely implemented across California,” and that “Healdsburg’s inclusionary housing policy is essential to addressing the housing needs of our community and is a sound and widely accepted approach to maintaining housing affordability and diversity.”
While the cited release is not available on Healdsburg’s website, the city’s most recent release highlights a $21.1 million grant from the State of California for the construction of the first 48 units and 3,000 square foot community building in an eventual 118 unit “affordable” housing development. At a cost of $440,000 per “affordable” unit, the city would have to allow the construction of 22 homes like the Pillings’ to pay for each of the 48 apartments built by the grant.
