HomeMy WebLinkAbout10-ATTACHMENT E (THE LEGAL AUTHORITY FOR INCLUSIONARY HOUSING ORDINANCES)The Legal Authority of Inclusionary Housing Ordinances
California Constitution Article XI, Section 7, grants each city and county the power "to
make and enforce within its limits all local, police, sanitary, and other ordinances and
regulations not in conflict with general laws." This is referred to as the police power of
local governments. Using this police power, many municipalities have adopted
"inclusionary housing" ordinances that require developers of both rental and ownership
housing to ensure that a certain percentage of dwelling units in a new development be
provided as affordable units.
In June of 2015, in the decision of California Building Industry Association v. City of San
Jose, 61 Cal.4t" 435 (2015), the California Supreme Court upheld the City of San Jose's
inclusionary housing ordinance, which required all new residential development projects
of 20 or more owner -occupied units to sell at least 15% of the for -sale units at a price
that is affordable to low- or moderate -income households. The challenged ordinance
also allowed developers to opt out of the 15% requirement by dedicating land elsewhere
or by paying in -lieu fees to the City. The Supreme Court concluded that the ordinance
was a proper exercise of the City's police power, and did not constitute an exaction
upon the developers' property. Consequently, a municipality need not demonstrate that
an essential nexus or rough proportionality exists between its inclusionary housing
requirements and the projected impact of the proposed land use. Further, the Supreme
Court affirmed that enforcing inclusionary housing requirements to address a growing
housing problem is "constitutionally legitimate" and cited the severe scarcity of
affordable housing in California in its decision.
In September of 2017, the Governor approved Assembly Bill No. 1505 ("AB 1505")
authorizing cities and counties to extend inclusionary housing requirements to rental
housing developments, and thereby superseding the 2000 decision of Palmer/Sixth
Street Properties, L.P., et al. v. City of Los Angeles, 175 Cal.App. 4t" 1396 (2009). In
Palmer, the Court of Appeals held that an inclusionary housing ordinance, as applied to
rental housing, conflicted with and was preempted by the Costa -Hawkins Rental
Housing Act, which allows residential landlords to set the initial rent levels at the start
of a tenancy. The Court of Appeals found that "forcing Palmer to provide affordable
housing units at regulated rents in order to obtain project approval [was] clearly hostile
to the right afforded under the Costa -Hawkins act to establish the initial rental rate for a
dwelling unit."
AB 1505, which added subsection (g) to Section 65850 of the Government Code,
expressly authorizes municipalities to adopt inclusionary housing ordinances that
require, as a condition of development of residential rental units, that the development
include a certain percentage of residential rental units affordable to and occupied by
moderate -income, low-income, very low-income, or extremely low-income households.
Additionally, AB 1505 requires any inclusionary housing ordinance to provide alternative
means of compliance that may include, but are not limited to in -lieu fees, land
dedication, off-site construction, or acquisition and rehabilitation of existing units.