U.S. Supreme Court Asked to Consider Constitutional Challenge to California Zoning Ordinance

As we previously discussed, Owners’ Counsel of America (OCA) and the National Federation of Independent Business Small Business Legal Center (NFIB) have asked the U.S. Supreme Court to review an important property rights case decided by the California Supreme Court earlier this year. If not overturned, the case, California Building Industry Association v. San Jose, No. 15-330 (September 16, 2015), could set a damaging precedent that allows California agencies to impair the value of private property without paying the property owners just compensation.

How the California Supreme Court’s Decision Affects Property Owners’ Rights

Under the U.S. Constitution and the constitutions and laws of every state, government agencies can only exercise the power of eminent domain upon payment of just compensation. The exercise of eminent domain can take many forms, from direct seizure of private property to regulating the use of private land which impairs its value.

Unfortunately, this fundamental protection is often overlooked by government agencies. OCA attorneys across the country fight to protect landowners’ rights against overzealous government action. The OCA/NFIB brief in California Building Industry Association v. San Jose is one recent – and important – example.

The case arose out of a city ordinance that requires residential developers to help mitigate the Silicon Valley affordable housing crisis. Under the ordinance, any developer constructing more than 20 units is required to either:

• Designate 15 percent of the units for sale at below-market prices to qualifying buyers for up to 55 years,
• Construct alternate affordable housing, or
• Give land or money to the City of San Jose.

The California Building Industry Association (CBIA) challenged the ordinance as an illegal “exaction” and an unconstitutional taking. In short, it argued that the ordinance denied property owners of value – albeit for a public purpose – without just compensation. The California Supreme Court disagreed and upheld the ordinance.

Why OCA Has Asked for the U.S. Supreme Court’s Review

If allowed to stand, the California Supreme Court’s decision could have wide-ranging implications for property owners throughout the state, and possibly even nationwide. Along with the face value of the California Supreme Court’s ruling in San Jose’s favor, allowing the decision to stand would represent a departure from existing U.S. Supreme Court jurisprudence that provides the protections sought by the CBIA.

In a line of cases dating back to 1987, the U.S. Supreme Court has held that conditions such as those imposed by the City of San Jose are subject to heightened scrutiny under the unconstitutional conditions doctrine.   In Nollan v. California Coastal Comm’n, Dolan v. City of Tigard, and St. Johns River Water Management District v. Koontz, the Court established that the government must show that what a developer proposes to do or build contributes to a “problem,” and that the government-imposed condition will mitigate the impact and is proportional to that impact. However, in California Building Industry Association v. San Jose, the California courts applied a lesser, non-constitutional standard that merely requires a “rational basis” for the ordinance in question.

In the California courts’ eyes, the ordinance does not constitute a taking since developers have the option to accept a reduced (below-market) purchase price or construct alternate affordable housing instead of giving up land or money to the government. This, according to the courts, makes the ordinance a mere “zoning restriction” not subject to heightened scrutiny. The courts found that since the ordinance aids (at least in theory) in resolving the affordable housing crisis – a crisis that has not been blamed on residential developers – it has a “rational basis” that supports the conditions imposed by the City of San Jose.

At OCA, we are strongly opposed to the California Supreme Court’s decision. Regulating the value of a private owner’s property is a clear form of condemnation, and one that cannot be taken lightly. We are urging the U.S. Supreme Court to step in and apply its longstanding precedent that provides appropriate protections for property owners’ rights.

Owners’ Counsel of America | Leading Inverse Condemnation Attorneys Nationwide

Owners’ Counsel of America is a network of the nation’s leading attorneys in the areas of inverse condemnation and eminent domain. If you need legal assistance with a property rights matter, please contact us online or find an OCA lawyer in your state today.

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