Many cities in California are having difficulty providing a sufficient quantity of low income housing. To solve the problem, San Jose and many other cities in the state passed ordinances that require housing developers to include a minimum number of below-market units in new projects within the city limits. In a ruling that may have implications for construction law across the entire state, including Orange County, the United States Supreme Court refused to hear an appeal from a decision of the state supreme court that upheld the constitutional validity of the San Jose ordinance.
According to the League of California Cities, approximately 170 local governments across the state have enacted similar ordinances. San Jose's ordinance requires developers to allocate 15% of the units in developments of 20 or more units to affordable housing. A developer can avoid the requirement by paying a fee that is based on the number of units in the project.
The state building industry opposes such ordinances, claiming that they are unconstitutional and will ultimately raise the prices of all housing. Represented by the Pacific Legal Foundation, a conservative legal organization, the building contractors sued to have ordinance declared unconstitutional because it effectively takes private property without just compensation. The California Supreme Court rejected this argument in a unanimous decision handed down in June 2015, and thus upheld the San Jose ordinance.
The builders appealed this ruling to the United States Supreme Court, but the Court declined to hear the case. The Court's ruling in effect affirms the decision of the state supreme court. While the ruling applies only to San Jose's ordinance, it may have an effect on similar ordinances in other cities. Anyone concerned about the legal status of any similar ordinance may wish to consult an attorney who specializes in construction law for an evaluation of the effect of the ordinance on a proposed development.
Source: San Jose Mercury News, "U.S. Supreme Court leaves San Jose housing law in place," Howard Mintz, Feb. 29, 2016