616 Croft Ave., LLC v. City of West Hollywood, California
Husband and wife entrepreneurs Shelah and Jonathan Lehrer-Graiwer purchased two adjacent homes in West Hollywood in the early 2000s with the intent of building an 11-unit condominium complex on the lots. The city praised the “superior architectural design” of the project, and noted that it would provide “11 families with a high quality living environment” while “helping the city achieve its share of the regional housing need.” Despite the plaudits, the city conditioned their building permits on payment of an “affordable housing” fee of $540,000 pursuant to the “Inclusionary Housing Ordinance.” The Lehrer-Graiwers paid the fee under protest and sued the City, claiming that the fees violated their property rights.
The city admitted that the affordable housing problem in West Hollywood existed long before the Lehrer-Graiwers ever applied for a permit and that it had no evidence whatsoever that the Lehrer-Graiwers’ project had anything other than a positive impact on the availability of affordable housing in West Hollywood. Under the Supreme Court’s unconstitutional conditions doctrine, these concessions should have ended the case with a court ruling that the exaction violated the owners’ rights. But California courts refuse to apply this doctrine to fees imposed by legislatures (or city councils) and upheld the ordinance-imposed exaction in this case.
Several justices of the Supreme Court have noted that this legislative exception makes no sense because the Constitution requires compensation whenever the government – any branch – takes private property (including money) for public use. A PLF petition asking for Supreme Court review was denied October 30, 2017.