Crisis management

If the building industry is able to stop new affordable-housing rules in Sacramento County, the housing crisis throughout California is likely to grow worse. That’s the message from state Attorney General Bill Lockyer, who has now entered the legal fray over the county’s “inclusionary housing” ordinance.

“If developers are successful in blocking Sacramento’s ordinance, similar policies throughout California may be abandoned or thrown out, and the notion of an affordable home could become a relic of history,” said Lockyer in an April 27 statement. At the same time, Lockyer asked the Sacramento Superior Court to allow his office to intervene in a lawsuit brought by builders against the county’s aggressive new affordable-housing policy.

The new law requires that 15 percent of all new housing units be affordable to low-income families. It is the only housing ordinance in the nation that also requires developers to provide housing for “extremely low income” families, those making less than $17,000 for a family of three. Under the new law, 3 percent of all new housing must be affordable to extremely low-income families, with the other 12 percent divided between the “low” and “very low” income categories.

The ordinance is an attempt to help affordable housing keep pace with the construction of higher-end homes. The median home price in Sacramento County is now over $300,000.

The ordinance also encourages development of mixed-income communities, with affordable housing built in the same neighborhood as more-expensive homes. Supporters of the law say that it will help ease economic segregation and help stem long commutes for workers with jobs in more-affluent communities.

But in March, the Building Industry Association of Superior California (BIA) filed a suit to block the county’s latest affordable-housing ordinance, calling the new law an illegal “taking” of private property.

Last week, several affordable-housing advocacy groups, including the Sacramento Housing Alliance, and several low-income individuals were given permission by a Sacramento Superior Court judge to join Sacramento County in defending the ordinance against the builders’ suit. The motion was granted over the objections of the BIA. Next, on May 24, the court will hear the attorney general’s request to enter the suit.

Lockyer got involved in a similar legal battle four years ago, filing a legal brief in support of the city of Napa’s affordable-housing ordinance when it was challenged by a home-builders trade group. That city’s housing law was upheld by the California appeals court in 2001. By filing to intervene in the Sacramento case, the attorney general is wading even deeper into a local dispute over housing law.

“This lawsuit has the potential to reverberate around the state of California,” said Dan Siegel, supervising deputy attorney general, who is handling the case for the attorney general’s office.

Siegel noted that about 20 percent of local governments around the state have adopted some sort of inclusionary-housing ordinance, and many others are considering such laws. “There is the potential for more lawsuits. And there is the potential for this lawsuit, if successful, to have a chilling effect on other jurisdictions,” Siegel added.

The lawsuit alleges that the county is depriving the BIA’s clients—mostly real-estate developers and construction companies—of their property rights, rights guaranteed under the Fifth Amendment of the U.S. Constitution as well as the California Constitution. The Fifth Amendment prohibits government from taking private property for public use “without just compensation.”

The builders have complained that the county failed to show a proper connection between the construction of market-rate housing—houses that will sell for what the market will bear—and the need for affordable housing.

Developers have to pay fees for the construction of new roads, schools, parks and other services that serve new communities. Dennis Rogers, vice president of the BIA, said that the connection to these types of services and infrastructure are pretty straightforward. But he said that’s not the case when it comes to the new affordable-housing law.

“There’s no connection here. Building market-rate housing does not cause the need for affordable housing” the way that it creates the need for other kinds of infrastructure and services, he added.

Rogers also said the new law would lead to even higher home prices overall. Because builders will be required to subsidize low-income families, they will pass the costs on to middle-class families.

He said the BIA isn’t opposed to programs that provide for more affordable housing, “but it’s unfair to ask one narrow subset of society to provide a broad societal good.

“If you need food, we don’t make Raley’s sell it to you at 10 percent of market value,” Rogers added. Instead, all of society contributes through paying taxes that fund food stamps and other assistance.

But Valerie Feldman, an attorney with Legal Services of Northern California, which is representing the housing groups, said the connection between building high-end housing and the need for more affordable housing is obvious.

The kind of large-scale development going on in Sacramento County is creating much more than new houses; it is creating whole new neighborhoods, she noted. Along with the new rooftops come the fast-food restaurants, the day-care centers, the grocery stores and other services that spring up in these new communities. Even the teachers who work at the schools constructed in these new neighborhoods may be priced out.

“You want people who work in those jobs to be able to live in that community, too,” Feldman said.

Feldman also objected to the argument that the county’s ordinance amounts to a “taking” of private property. For a taking claim to be successful, she said, a property owner typically has to show that all, or nearly all, of the property’s economic value has been lost because of a government action. That’s clearly not the case here, she said.

She also said that the taking argument ignores how much economic value is being “given” to developers when local government approves their land for development. “It’s one of the things that is not very well-publicized,” Feldman explained. “You have just given the possibility of enormous wealth when the zoning is changed. They are going to make pretty significant profits.”