Affordable housing advocates in California are keeping a close eye on local housing laws this year after a developer won a major victory in his challenge of a Los Angeles plan.
There’s concern that the case will have a ripple effect on inclusionary housing laws across the state. Approximately 170 California jurisdictions have such laws.
The outcome is significant, said attorney Jeffrey Lee Costell of the Santa Monica-based firm Costell and Cornelius, who represented the victorious developer in fighting a requirement to build affordable housing as part of his market-rate development.
“It potentially has broader ramifications in the sense that you’ve got a court of appeal speaking on the issue,” Costell said. “This type of so-called inclusionary housing ordinance that has the effect of restricting the rents that you can charge, that kind of ordinance is going to have go by the wayside.”
The upshot is that if jurisdictions want to promote affordable housing they are going to have find other ways to do that instead of putting it on the back of developers, said Costell.
On the other side, one affordable housing advocate said housing groups are still analyzing the situation, and it’s too early to determine the case’s impact.
Developer Geoff Palmer challenged a rule that called for him to include affordable units as part of his mixed-use project or pay an in-lieu fee that the city of Los Angeles could use to build housing elsewhere. The site is used as a parking lot but previously contained a 60-unit low-income apartment hotel demolished in 1990.
The city Planning Commission conditionally approved Palmer’s mixed-used project, requiring him to provide 60 replacement low-income units or pay an in-lieu fee of $5.7 million.
Palmer contended that the city’s requirements conflict with and are pre-empted by the state’s Costa-Hawkins Act. The act’s vacancy decontrol provisions allow residential landlords to set the initial rent levels at the commencement of a tenancy.
The developer was successful in his suit, and the state Supreme Court recently declined to review the case.
Advocates are weighing possible options as they try to determine how widely applicable the ruling is, said officials.
There has been some early talk about introducing legislation, said Mike Rawson, director of the California Housing Law Project.
The idea is that a legislative amendment could clarify that landlords can establish initial rents except in developments that are subject to affordable housing ordinances. Whether this will move forward remains to be seen.
