First step to building housing: restore the right to build

November 09, 2021 | By DAVID DEERSON , ANGELA C. ERICKSON

For half a century, the Andrews family has owned a little over 16 acres of land in Mentor, Ohio, just outside of Cleveland. Recent developments have transformed the neighborhood from a rural residential area into a lively mixed-use community with residential, office, commercial, industrial, medical, and other uses.

An old, dilapidated family home used to sit on the Andrews parcel, but the city agreed it should be demolished a few years ago. Given the lot’s vacant status, and the new character of the community, the Andrews family wants to develop their property and add up to 40 new homes to their town.

However, the zoning classification on their property limits them to low-density single-family homes with half-acre lots. That would permit only about 13 new units and would require them to leave nine full acres undeveloped.

So, in 2019, the family applied to have the property rezoned to permit up to 40 new homes, leaving five acres as open space. And they had good reason to believe that their application would be approved. The city had approved a nearly identical plan on a nearby property just two years earlier. In fact, the city hasn’t once denied this sort of rezoning application since 2004, and its comprehensive plan states an expressed preference for the type of zoning classification the family sought.

But the City Council denied the Andrews’ rezoning plan by a four-to-three vote. That decision resulted in  a 60% loss in property value and would leave 27 fewer homes for families in Mentor. The city did not explain why it refused their application while approving many almost-identical developments in recent years.

Less than 15 miles from the Andrews family property sits a historical marker commemorating the U.S. Supreme Court case, Euclid V. Ambler Realty Co., which gave localities the broad authority to promulgate local zoning and land-use regulations. Although that 1926 case has troubling origins in class and racial animus, it still stands today and governs how far state and local governments may go in preventing landowners from building new housing for their communities.

And America needs more housing.

Freddie Mac has estimated that the country needs at least 3.8 million housing units to meet current demands. Many of the needed units are single-family starter homes. Ohio is missing 60,000-80,000 homes, while California—with far more restrictive zoning and land-use regulations—is missing 160,000 homes. Decades of academic research have demonstrated how zoning and land-use regulations can substantially increase the price of housing by both increasing the cost of building homes and decreasing the supply of homes being built.

Standing up for the right to build more housing free from arbitrary and irrational government interference, the Andrews family sued the City of Mentor for violating the Equal Protection Clause of the U.S. Constitution. But because courts have not yet established property rights as “fundamental” under the Equal Protection Clause, the Andrews family faced an uphill battle against the dreaded “rational basis” test.

This legal standard allows the government to win almost every time. As long as a government action has any conceivable rationale, even if it’s not the one the government had in mind when it acted, the government wins. This requires litigants to negate every imaginable, plausibly legitimate reason that the government might theoretically have had for treating them differently. So, it was little surprise when a federal district court in Ohio dismissed the Andrews’ case out-of-hand: According to that court, the Andrews family had failed “to negate potential explanations for the City’s decision” to deny their rezoning application.

After PLF took up the case, the Sixth Circuit Court of Appeals reversed, allowing the Andrews’ claims to proceed.

The Sixth Circuit observed that Mentor had not even attempted to assert any legitimate basis for the city’s denial. Although government actions under the rational basis test are presumed legitimate, that does not mean that government “can obtain judgment in its favor without so much as identifying a single rational explanation for its disparate treatment of similarly situated properties.”

The court recognized the absurd trap that plaintiffs would find themselves in under a contrary rule. After all, if the Andrews family was required to “concoct and rebut a potentially valid rational for the City’s action,” the family would essentially be forced to provide the government with a legal theory letting it off the hook.

While it may sound obvious, and while legal scholars have long bemoaned the unfairness and absurdity inherent in federal rational basis jurisprudence, precious few federal court decisions have done anything to mitigate this widely recognized injustice.

PLF’s victory in this case represents a major step toward sound constitutional enforcement, one which both vindicates property rights and allows property owners like the Andrews family to help close the gap in America’s dire need for housing.

This article is part two in a series on the housing crisis in California.