California Supreme Court ruling sets precedent for inclusionary housing in state

2425 Shattuck Avenue is an affordable housing unit in Downtown Berkeley.
Michael Wan/File
2425 Shattuck Avenue is an affordable housing unit in Downtown Berkeley.

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The California Supreme Court released a ruling Monday that sets a legal precedent for California cities and counties to adopt inclusionary housing policies.

The ruling, in California Building Industry Association v. City of San Jose, affirms the city’s right to enforce an inclusionary zoning ordinance requiring that 15 percent of homes be made available for purchase by lower-income residents, requiring the payment of a fee if that benchmark isn’t met or requiring dedication of land for affordable housing in new residential developments with more than 20 for-sale homes.

The ruling sets a precedent for other California cities and counties to adopt a similar inclusionary zoning ordinance and to have “some legal assurance” that their policy would be upheld, according to Brian Uhler, senior fiscal and policy analyst for the Legislative Analyst’s Office.

In 2009, Palmer/Sixth Street Properties won a lawsuit against the city of Los Angeles, saying inclusionary housing policies violated the builders’ constitutional right. Since then, no California city has been able to enforce its inclusionary zoning policies, according to Sarah Gudernatch, spokesperson for the Non-Profit Housing Association of Northern California.

According to Gudernatch, many cities in California have enacted inclusionary zoning on a volunteer basis.

In response to the Palmer decision, the city of Berkeley gave the option for developers to either pay a fee of $20,000, which would go to the housing trust fund, or include affordable housing units, said Rent Board Commissioner Alejandro Soto-Vigil. With the housing shortage in California, he said, it should be beneficial to Berkeley to be able to build as many affordable housing units as possible.

According to Uhler, inclusionary housing creates more mixed-income communities, where low- and moderate-income residents can live in the same housing development with the same amenities. But major factors underlying the California housing shortage — such as stringent local planning review and environmental review processes, as well as community opposition to new buildings — remain largely unaffected by the ruling, he said. According to Uhler, the effect of the ruling is “sort of limited by how the productive overall market-rate housing economy is.”

In the Bay Area, where the housing market is highly competitive, it is likely that people buying market-rate housing would bear a large portion of the cost to subsidize the creation of affordable units, he said.

“We’re heartened to see this court’s decision because we think it’s a really good step forward to making the Bay Area a more affordable place to live, especially for diverse populations,” Gudernatch said. “We think it’s really going to be helpful for all sorts of Californians.”

Contact Kayla Kettman at [email protected].