President’s weekly report — June 19, 2015
Bad news on property rights from the California Supreme Court
To celebrate the Magna Carta’s 800th birthday, the California Supreme Court issued this unanimous and depressing opinion on the state of property rights in California. California Building Industry Association v. San Jose involves the city’s requirement that builders of 20 or more homes sell 15% of them (with the same size and layout) to low income residents at below-market prices or pay $122,000 per home into a low-income housing fund. We challenged the law because the City did not show that the construction of new market-priced homes creates any need for more low-income housing. After all, both the supreme courts of both the United States and California have required governments to show a relationship between the adverse impacts of a building project and measures imposed to mitigate those impacts.
No matter, said the California Supreme Court. It found that the requirement that home builders set aside 15% of their units is not an “exaction,” it is a legislatively imposed price control on home sales. The court continued that legislatively imposed price controls, just like zoning restrictions, should be upheld if they serve to advance any public purpose. Here alleviating a shortage of affordable housing is a public purpose and thus demanding that builders take care of the shortage is acceptable. The court found that Nollan, Dolan and Koontz are essentially irrelevant here simply because the forced subsidies for low-income buyers did not transfer any property to the City. Apparently, the only limitation on the ability of a city to impose price controls is that the builders get a “fair and reasonable return” on the overall development. In other words, home building is to be treated just like a public utility. So much for constitutionally protected property rights.
The implications of this decision are breathtaking. The court’s embrace of price controls on housing has broad implications beyond the sale of new homes and rent control (which the court also favors). Why not price controls on the sale of existing homes? Why require that only 15% of new homes must be sold for below-market prices? Why only developments larger than 20 homes? Indeed, other communities in California have even more draconian mandates (which, by the way, don’t work.) And, as we all know, price controls have been a smashing success every place they have ever been tried — if one measures success by shortages, black markets, and economic dislocation.
Never did the court acknowledge that the greatest impediment to affordable housing is the plethora of existing restrictions on home building in the first place — a state of affairs that will be made far worse by forcing buyers of new homes to subsidize low-income buyers. As recently pointed out in The Economist, “The difference in housing costs is mostly due to different attitudes to building. Freewheeling Houston approved more than 51,000 new dwellings in 2013 whereas San Jose, home to some of the nation’s worst NIMBYs, approved just under 8,000.”
We are considering our options. For more, see our blog post here.
Good news on free speech from the Supreme Court
Good News on free speech
The Supreme Court of the United States unanimously reversed the Ninth Circuit’s decision in Reed v. Town of Gilbert. The Court struck down a sign ordinance in Gilbert, Arizona, that was preventing a small church from placing directional signs to its Sunday morning services. Although the ordinance was not specifically directed at the church, the Court was concerned that other types of signage were given more leeway — depending on the speech content of the signs. We had filed this amicus brief pointing out even if the town didn’t intend to harm the church or violate its constitutional right of free speech, the fact that the ordinance does harm free speech rights is reason enough to strike it down.
Wetlands and appealing jurisdictional determinations
Today Pacific Legal Foundation filed this reply to the Army Corps of Engineers’ response to the Supreme Court‘s order to respond to our petition for rehearing in Kent Recycling v. United States Army Corps of Engineers. This is the case where we’re asking for the right to review a wetlands determination by the Corps — without first having to spend years and several-hundred thousand dollars for an unnecessary permit application. For more, see our blog post.
Sea Urchins
PLF recently filed in California Sea Urchin Commission v. Bean this motion for summary judgment on behalf of fishermen who are being threatened with possible criminal punishment by the Fish & Wildlife Service, despite the fact that Congress passed a statute to specifically forbid the Service from doing so. This is a clear case of abusive bureaucratic overreach, that we hope the courts will strike down. For more, see our blog post.
