616 Croft Ave., LLC v. City of West Hollywood, California

In West Hollywood, new homes = government license to steal

Cases > Property Rights > 616 Croft Ave., LLC v. City of West Hollywood, California
Case Status: Lost: Supreme Court declined to review the case.

Shelah and Jonathan Lehrer-Graiwer became victims of government extortion in West Hollywood, California over new condos. A city ordinance purports to address an affordable housing problem by demanding builders either sell a percentage of new homes at below-market rates or pay hefty “affordable housing” fees. Our clients were squeezed for $500,000. Two previous PLF Supreme Court wins determined such “inclusionary zoning” policies without clear public need are unconstitutional. A PLF petition asking for Supreme Court review was denied October 30, 2017.

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.

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What’s at stake?

  • Government barriers that prohibit and punish home building are the cause of California's high home prices. The city is scapegoating the Lehrer-Graiwers to pay for a housing shortage created by its own policies.
  • The Supreme Court has repeatedly said that cities may not use their permitting power to force individual developers to bear the costs of problems, like affordable housing, that should in fairness be borne by the public as a whole. So-called "inclusionary zoning" policies are flatly unconstitutional.
  • The way to make housing more affordable is to build more housing. Punishing small developers for building only makes the problem worse.

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