May 1, 2018

Challenging unconstitutional “affordable housing” fees in California

By Larry G. Salzman Senior Attorney

This morning PLF filed its opening brief in the California Court of Appeals on behalf of Dart and Esther Cherk, the next stop in their halting saga to divide a vacant, 2.79-acre residentially zoned parcel of land into two developable lots in Marin County, California.

The Cherks first filed an application with the County to split the lots back in the year 2000. The land had been in their family more than 70 years, but the Cherks—now in their mid-eighties—wanted to quickly sell half to supplement their modest retirement income while preserving the rest for their family’s future. It didn’t work out that way.

What transpired was a years-long process to get a permit. In the interim, the law changed and when they were finally given permission to divide the lots it came with an unexpected condition: the approval was only good if the couple made a roughly $40,000 payment to the County, styled as an “affordable housing” fee. They ultimately paid the fee under protest—and then demanded a refund from the County, challenging the fee as unconstitutional, with PLF’s help.

Marin County is well known to have one of the least affordable housing markets in the nation. The reason is not seriously in question: the demand for housing there has long outpaced the supply. While government officials and housing advocates wring their hands about the skyrocketing cost of housing, the problem is almost entirely created by government itself: Marin County has some of the most prohibitive restrictions on land use in the state, making building almost impossible.

The way to make housing more affordable is to build more housing. But instead of freeing developers to make productive use of land, Marin County has responded to cries of existing residents who demand that new construction only happen “not in my backyard” (NIMBY). Prices are high and going higher because the government refuses—year after year, now going on decades—to let enough housing be built to meet the needs of a rising population.

Rather than respect property rights and allow a free market in land use, Marin County (and other California cities) have concocted counterproductive “affordable housing” programs by which they collect fees from people like the Cherks (who are actually trying to create new building lots) and stuff it into government coffers for government programs that will allegedly make housing more “affordable.” Beyond violating property rights, these programs have been widely studied and widely criticized as ineffective—even tending to result in fewer net homes and higher prices where they are tried.

A stupid or unjust policy is not always illegal, but PLF’s challenge centers on the fact that Marin County’s program doesn’t comply with U.S. Supreme Court precedent protecting property owners from being forced to pay extortionate permit fees. According to that precedent, local governments can’t demand money for a permit to change the use of land unless that permit offsets a public cost created by the proposed development. For instance, if your home requires the government to build new utilities or sidewalks, you can be charged a fee to offset those public costs as a condition of your building permit. Here, nothing about the Cherks’ lot split causes or makes “affordable housing” any worse, so they can’t lawfully be charged a fat fee to solve the region’s so-called “affordable housing” problem.

The trial court ruled against the Cherks in January, holding that while this principle is valid it does not apply to fees intended to raise money for affordable housing in California. As our appellate brief makes clear, we think that’s a hasty conclusion and look forward to it being reversed. But if we need to take the Cherks’ case all the way to the U.S. Supreme Court, that’s what we’ll do to vindicate their right to make reasonable and productive use of their property free of the County’s unconstitutional demands.

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