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Home Builders Ass'n of N. Cal. v. Napa, City of

ELR Citation: 31 ELR 20800
Nos. A090437, 108 Cal. Rptr. 2d 60/(Cal. Ct. App., 06/06/2001)

The court affirms a trial court decision that a California city's inclusionary zoning ordinance requiring the development of affordable housing does not violate the federal and state Takings Clauses and does not violate the federal Due Process Clause. The ordinance requires that 10% of all newly constructed residential units in the city must be affordable. To meet this requirement, developers may dedicate land for affordable housing, construct affordable units on an alternate site, or pay an in-lieu of fee to a trust for affordable housing. The city may also waive the affordable housing requirement. A builder's association claimed that the ordinance was facially invalid.

The court first holds that since the city can waive the ordinance's requirements, the ordinance does not, on its face, result in a taking. The court also holds that by creating affordable housing, the ordinance advances a legitimate state interest. The court next holds that the ordinance need not meet the essential nexus heightened standard of review under U.S. Supreme Court takings precedent. The essential nexus test determines the validity of a particular land use bargain between a governmental agency and a person who wants to develop their land. Here, the association offers a facial challenge to economic legislation that is generally applicable to all development in the city. Likewise, the court holds that state takings precedent offered by the association does not apply to facial challenges. The court also holds that the ordinance is not facially invalid under the federal Due Process Clause. The association argued that the ordinance's requirements provide no mechanism for property owners to make a fair return on units that they must sell or rent at below-market rates. However, the fair return standard is usually applied to historically regulated industries and not to residential developers. The court additionally holds that the city has the authority to completely waive a developer's obligations under the ordinance, and, thus, a facial challenge under the Due Process Clause must fail because a regulation is facially invalid only if it will not permit those who administer it to avoid an unconstitutional application to complaining parties. The court then holds that the ordinance's in-lieu of provision does not violate California Proposition 218's regulation of property fees. Proposition 218 regulates fees that burden landowners as landowners. Here the in-lieu of fee only applies if a landowner elects to develop its land and is not imposed solely by virtue of property ownership.

The full text of this decision is available from ELR (9 pp., ELR Order No. L-376).

Counsel for Plaintiff
Paul Campos
Pacific Legal Foundation
2151 River Plaza Dr., Ste. 305, Sacramento CA 95833
(916) 641-8888

Counsel for Defendant
Kirk E. Trost
Hyde, Miller, Owen & Trost
428 J St., Ste. 400, Sacramento CA 95814
(916) 447-7933