Inclusionary Zoning for Affordable Housing Under Attack

• Citation: Vol. 37 No. 3
• Publication year: 2014
• Author: By Kevin D. Siegel and Matthew D. Visick

Inclusionary Zoning for Affordable Housing Under Attack

By Kevin D. Siegel and Matthew D. Visick^*

I. INTRODUCTION

For 100-plus years, cities and counties have used zoning ordinances to establish permitted and prohibited uses of real property. The courts have recognized that these policy decisions are best made by local elected officials who know their communities and are responsive and responsible to their constituents. Thus, the courts have afforded great deference to these legislative decisions of city councils and boards of supervisors.

In California Building Industry Association v. City of San Jose (No. S212072) ("CBIA v. San Jose"), the California Supreme Court is threatening to chip-away at this longstanding deference. CBIA v. San Jose concerns a facial challenge to an inclusionary zoning ordinance that requires residential developers either to set aside a certain number of units for affordable housing or to pay an in-lieu fee to fund affordable housing programs. The San Jose City Council adopted the ordinance based on findings, which are consistent with many agencies' inclusionary zoning ordinances, that market-rate residential development (1) uses-up the limited supply of available land that otherwise might be used for affordable housing, and (2) exacerbates the affordable housing shortage (and attendant service and civic problems) by creating an influx of new low-income workers needed to provide services for the new market-rate houses. The Sixth District Court of Appeal held that such inclusionary zoning legislation is a presumptively valid exercise of a city's land use authority, and that the challenger thus bears a high burden to prove that the ordinance is an invalid exercise of police power.¹ The Supreme Court granted a writ of certiorari to determine the proper standard of review.

In granting review, the Court cited San Remo Hotel L.P. v. City & County of San Francisco,² in which the Court had applied a stricter standard of review to the question of whether an ordinance which mitigated impacts caused by the conversion of residential units to hotel use constituted a taking.

Thus, the risk is high that the Court will hold San Jose's adoption of an inclusionary zoning ordinance does not constitute presumptively valid land use legislation which the challenger must show is not reasonably related to the City's promotion of affordable housing for the public welfare. Instead, the Court may hold that cities and counties must prove that inclusionary zoning requirements are reasonably related to development's deleterious impacts. If the Court thus ratchets-up the standard of review, it may chill local agencies' efforts to use their police power to address the pressing and persistent need for affordable housing.

II. THE DEVELOPMENT OF EXCLUSIONARY AND INCLUSIONARY ZONING

When confronted with challenges to zoning ordinances in the early 1920s, the courts considered whether ordinances that excluded certain uses were proper exercises of local agencies' police powers. Many will remember Village of Euclid v. Ambler Realty from law school, in which the United States Supreme Court upheld an early zoning ordinance as a valid exercise of the city's police power.³ Zoning ordinances were a recent, turn-of-the-century innovation.⁴ Euclid, a suburb of Cleveland, Ohio, had watched as development extended toward its borders. In an effort to control urbanization, Euclid adopted a zoning ordinance to limit industrial development and prohibit certain land uses in residential districts. A property owner asserted that the zoning was in excess of Euclid's police power and depressed the value of its property, which it intended to use for industrial purposes.

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After considering various health and safety benefits of excluding industrial uses from residential zones, the Court upheld the ordinance under the deferential, rational-basis test. The Court could not say that the ordinance was arbitrary, unreasonable, or without substantial relation to the public health, safety, morals, or general welfare.⁵

The California Supreme Court ruled similarly. In Miller v. Board of Public Works, the Court considered a challenge to a zoning ordinance that prohibited residential developments of three units or more in a residential district.⁶ The plaintiff, who sought to develop a four-unit apartment building, complained that by proscribing multi-family housing the ordinance created "a single exclusive residence zone" and was in excess of the city's authority.⁷ The Court ruled that the city had legitimate reasons for prescribing the uses of real property, including that single family housing was considered "more desirable for the promotion and perpetuation of family life than an apartment, hotel, or flat."⁸

The California Supreme Court further explained that the judiciary should defer to local agencies' use of the dynamic and elastic police power to promote public welfare.

As our civic life has developed so has the definition of "public welfare" until it has been held to embrace regulations "to promote the economic welfare, public convenience and general prosperity of the community." [Citation.]
Thus it is apparent that the police power is not a circumscribed prerogative, but is elastic and, in keeping with the growth of knowledge and the belief in the popular mind of the need for its application, capable of expansion to meet existing conditions of modern life and thereby keep pace with the social, economic, moral, and intellectual evolution of the human race.⁹

Over the ensuing decades, local agencies used their police power to impose zoning regulations that addressed a variety of local land use goals, including dictating lot sizes,¹⁰ limiting the pace of growth,¹¹ mandating setbacks,¹² and requiring portions of a development project to be preserved as open space.¹³

Through this evolution, many communities moved beyond exclusionary-based land use regulation. Whereas local agencies initially sought to prohibit certain uses, many began to prescribe details regarding certain uses. The courts—including the California Supreme Court—continued to defer to these exercises of police power. For example, in Ehrlich v. City of Culver City, the California Supreme Court considered an ordinance which required the developer to incorporate art into its project, to donate art to the city, or to pay an in-lieu fee for the city's art fund. The Court held that the ordinance was not subject to heightened review as an exaction. Rather, the ordinance was "more akin to traditional land use regulations imposing minimal building setbacks, parking and lighting conditions, landscaping requirements, and other design conditions such as color schemes, building materials and architectural amenities" and was a valid exercise of the city's police power.¹⁴

Within this context, State and local agencies sought to address the affordable housing shortage. In 1980, the Legislature declared that "[t]he availability of housing is of vital statewide importance" and mandated that cities and counties plan, through the adoption of the Housing Element component of their General Plans, for the provision of their share of regional housing needs, including for persons of low and moderate incomes.¹⁵ The Legislature has further declared the governmental programs for the development of affordable housing serve valid public purposes.¹⁶

As one of their tools, local agencies across the State began adopting "inclusionary zoning" ordinances. An inclusionary zoning ordinance requires a residential developer to set aside a...