Adverse decision in extortionate permit fee case

Yesterday afternoon a trial court in Marin County, California, handed down a tentative ruling in Cherk v. County of Marin, rejecting the Cherk family’s argument that it was unconstitutional for the County to force them to pay $40,000 into an “affordable housing” fund as a condition of receiving a permit to split their vacant 3-acre residential parcel into two lots. The elderly couple sought to divide the land, which had been in their family since the 1950s, in order to sell a portion and supplement their modest retirement income.

The Cherk family sued for a refund on the grounds that the fee violates California’s Mitigation Fee Act and U.S. Supreme Court precedent, which outlaw permit fees that have no logical connection to the permit applicant’s proposed project. The written ruling makes unnecessary the oral argument that had been scheduled today.

The Court reasoned that precedent approving affordable housing ordinances in other cities compelled it to reject the Cherks’ claim for a refund. The court gave serious treatment to the matter in a relatively lengthy 15-page opinion. In PLF’s view, however, it misapplies the precedent. Other cases have indeed approved so-called “inclusionary housing” programs requiring developers to sell a certain percentage of developed homes at regulated, lower prices. Some of those ordinances also allow developers to choose to pay fees instead, which the California Supreme Court has said is OK. But Marin County’s ordinance provides no options to small property owners like the Cherks—it simply demands a lump sum of cash for the County’s affordable housing fund as a condition of a permit. The U.S. Supreme Court has said that such demands for cash in exchange for land-use permits, unrelated to any negative impact caused by a project, are unconstitutional.

Sadly, the Court’s ruling keeps in place Marin County’s counterproductive affordable housing ordinance, which punishes small property owners with extraordinary permit fees for taking such minor actions as splitting a single, vacant residential lot.

The way to make housing more affordable is to build more housing. But for decades Marin County has used its power to restrict or stop enough homes from being built to meet the rising demand. It is mainly government agencies, and certainly not property owners like the Cherks, that have created a crisis in affordable housing in Marin and elsewhere in California. Small projects like the Cherks’ in fact help alleviate the problem. It is not fair or constitutional to force individual property owners to pay special fees to solve a general social problem like a housing shortage that they did not cause. An appeal is likely.