February 29, 2016

Supreme Court denies review of San Jose affordable housing case

By Brian T. Hodges Senior Attorney

This morning, the Supreme Court denied review in the legislative exactions case, California Building Industry Association v. City of San Jose (more about the case here). Although the decision ends the Association’s facial challenge to a city ordinance requiring new developers to build and dedicated new houses as affordable housing (or pay a significant fee in lieu), the issue remains very live for future action. Indeed, the legality of the affordable housing scheme will once again raise a live issue when implemented as a condition on a permit approval.

Writing in concurrence, Justice Thomas recognized that our petition “implicates an important and unsettled issue under the Takings Clause.” Specifically, he noted that “[f]or at least two decades, […] lower courts have divided over whether the Nollan/Dolan test applies in cases where the alleged taking arises from a legislatively imposed condition rather than an administrative one.” The California Supreme Court, for example, holds that “a legislative land-use measure is not a taking and survives a constitutional challenge so long as the measure bears ‘a reasonable relationship to the public welfare.’”

Citing his earlier dissent from a denial of certiorari, Justice Thomas expressed continuing “doubt that ‘the existence of a taking should turn on the type of governmental entity responsible for the taking.’” Parking Assn. of Georgia, Inc. v. Atlanta (1995). He further noted the importance of resolving this issue

Until we decide this issue, property owners and local governments are left uncertain about what legal standard governs legislative ordinances and whether cities can legislatively impose exactions that would not pass muster if done administratively. These factors present compelling reasons for resolving this conflict at the earliest practicable opportunity.

Although today’s decision was disappointing, Justice Thomas’ concurring opinion gives us renewed hope that the right case will be accepted and this issue eventually resolved.

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