Ball in Governor’s Court after Supreme Court Upholds Inclusionary Housing

Yesterday brought great news from the California Supreme Court. In a unanimous decision, the Court in CBIA v. City of San Jose upheld San Jose’s inclusionary housing law against a challenge by developers. The closely watched case made clear that a city can constitutionally require affordable housing as part of new construction. 170 jurisdictions across California with inclusionary housing laws breathed a collective sigh of relief. Now, a crucial step needs to be taken to make sure that rental housing is part of the affordable housing that is built under inclusionary laws.

Unfortunately, this is not as easy as it seems. In October 2013, Governor Jerry Brown vetoed AB 1220 (Atkins), a bill that would have restored to cities the power to require inclusionary rental units be part of housing developments. As the Supreme Court was poised to review the CBIA v. San Jose case, Governor Brown justified his veto by stating, “I would like the benefit of the Supreme Court’s thinking before we make adjustments in this area.”

Translation: If the Supreme Court might throw out inclusionary laws altogether – whether they require affordable rental or ownership units -- as being unconstitutional, why should the Governor bother weighing in about whether cities could require affordable rentals as part of an inclusionary program?

The background here is Palmer/Sixth Street Properties L.P. v. City of Los Angeles, a flawed 2009 Court of Appeal decision holding that the Costa Hawkins Rental Housing Act, a state law passed to prevent rent control cities from controlling rent between tenancies (“vacancy control”), preempted local inclusionary housing laws to the extent that they required affordable rentals. An initial bill to overturn the Palmer decision failed to gain passage in Sacramento, but a second bill, AB 1220, passed the legislature in 2013 only to be vetoed by the Governor. This left local jurisdictions without a major tool many had relied on to provide new affordable rental housing.

Rather than tackle the issue and restore to cities their decades old power to insist on a percentage of affordable rental units in new construction, the Governor punted. He vetoed AB 1220 pointing out that he was not a fan of inclusionary housing when he was mayor of Oakland, and indicating that he wanted to await the Supreme Court ruling on whether inclusionary laws were legal at all.

The Supreme Court has answered his question. Inclusionary housing laws are not unconstitutional. Now the governor should announce his support for overturning the Palmer decision. To be clear, he does not have to change his mind about the wisdom of inclusionary housing laws. He simply needs to let local jurisdictions make their own decisions about whether they want affordable rental housing as part of new construction. To do that, the Legislature must again pass a Palmer bill, and this time the Governor should sign it.