April 6, 2015

Money and land, buildings and mortgages . . .

By Anthony L. Francois Senior Attorney

. . . are all property interests that a developer must turn over to the City of San Jose as the price of building new housing for city residents. These transfers are called exactions when they must be given in exchange for a permit to use your property. I will be arguing this Wednesday morning to the California Supreme Court that permit exactions must be reasonably related to some negative impact of the project being permitted, or they are unconstitutional. Without this common sense constitutional protection, governments are free to use their permitting authorities as unfettered pay-to-play schemes.

The case is California Building Industry Association v. City of San Jose, in which the Association is challenging the City’s below market housing set asides. San Jose’s city government wants to provide more affordable housing for low and moderate income residents. Instead of doing this with public resources, the city is exacting affordable housing units from residential developers: 15% of all new homes must be set aside for San Jose’s stock of below market housing. This is unconstitutional, because new homes do not cause an increased need for affordable housing. Rather, new supply is the solution to high housing prices. Builders already pay for the impacts of their developments. The constitution protects them and all property owners from being singled out to pay for broad public needs and obligations that their projects do not cause.

You can learn more about the case from our podcast, or by watching our short video:

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