Agenda - Planning Commission - 01/05/2017

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Zoning Bulletin November 25, 2016 1 Volume 10 1 Issue 22 Fees and In-Lieu Payments—City's 'G inclusionary housing ordinance r requires developers to set aside units as affordable housing or pay 4 in-lieu fee Developer contends in-lieu fee is an unconstitutional taking of property Citation: 616 Croft Ave., LLC a City of West Hollywood, 3 Cal. App. 5th 621, 207 Cal.Rptr. 3d 729(2d Dist. 2016) CALIFORNIA(09/23/16)—This case addressed the issue of whether the in-lieu housing fees under a city's inclusionary housing ordinance were constitutionally valid. The Background/Facts: Shelah and Jonathan Lehrer-Graiwer and 616 Croft Ave.,LLC(collectively, "Croft")was a developer of a complex of resi- dential rental units in the City of West Hollywood(the"City").In 2004,Croft applied to the City for permits to demolish two single-family homes sitting on adjacent lots and to construct in their place an 11-unit condominium complex. In reviewing Croft's permit applications, the City determined that Croft's proposed development fell under the City's inclusionary housing ordinance (the"Ordinance").The City had enacted the Ordinance in order to increase the availability of affordable housing in the City.The Ordinance required develop- ers to sell or rent a portion of their newly constructed units at specified below- market rates or,if not,to pay an"in-lieu"fee designed to fund construction of the equivalent number of units the developer would have otherwise been required to set aside.The City calculated the"in-lieu"fee according to a sched- ule developed via resolution by the City Council.When issuing its approval of Croft's permits,the City inquired how Croft would comply with the Ordinance. Croft responded it would pay the in-lieu fee. In 2005,the City approved Croft's permits application.The City conditioned the approval on Croft's agreement to, among other conditions,pay the in-lieu fees. Croft's development was delayed due,in part,to an economic downturn that began in 2007.The City agreed to extend its approval of Croft's permit application,and Croft agreed to be subject to new fee schedules. In 2011, when Croft requested its building permits, the in-lieu housing fee totaled$540,393.28. Croft paid the fee"under protest." Croft challenged the in-lieu fee as being invalid: (1)facially under the due process clause of the Fifth Amendment of the United States Constitution,and(2)"as applied"under that due process clause because"the City did not bear its burden in proving the fees were `reasonably related' to the deleterious public impact caused by Croft's development."The Fifth Amendment's Due Process Clause provides that the no one shall be"deprived of life,liberty or property without due pro- cess of law." Here, Croft was arguing that City's inclusionary housing ©2016 Thomson Reuters 9