UPDATE: The U.S. Supreme Court has decided to carry over its decision on this matter to its Friday meeting.
The U.S. Supreme Court on Monday will decide whether to consider a lawsuit filed against the City of West Hollywood that could have a major impact on how WeHo funds housing for low- and moderate-income people.
616 Croft Ave. LLC vs. the City of West Hollywood is a challenge to a city law that requires developers to set aside 20% of the housing units in a building of 10 units or more as affordable housing or to make a payment into a fund the city has established to fund affordable housing.
In the early 2000s, Shelah and Jonathan Lehrer-Graiwer, the couple behind 616 Croft Ave. LLC, bought two houses on adjacent lots at 612-616 Croft, which is between Rangely Street and Clinton Avenue, with the idea of replacing them with a condominium complex.
The project was delayed for several years and the city extended its approval. The city also changed its fee schedule during that time. In 2011 the Lehrer-Graiwers finally filed for a building permit, at which time the in-lieu fee had almost doubled to $540,000. The Lehrer-Graiwers also were required to pay $36,000 for parks and recreation under the state Quimby Act and $4,000 for traffic mitigation. They paid the fees “under protest” and sued the city.
The lawsuit is being handled by Pacific Legal Foundation, the nation’s oldest conservative/libertarian law firm, which handles cases free of charge if it believes they involve undue government restrictions on private property. PLF contends that the City of West Hollywood has no right to require a private individual or entity to pay for social programs such as affordable housing that should be funded by the city as a whole.
Thus far the couple have been unsuccessful in their quest for reimbursement. The Second District Court of Appeal affirmed Los Angeles Superior Court Judge Luis Lavin’s June 2015 ruling in favor of the city, and the state Supreme Court declined to review the case.
“The Lehrer-Graiwers were victims of a shakedown and we’re asking the U.S. Supreme Court for relief and redress against … the City of West Hollywood,” PLF senior attorney Brian Hodges said in a statement earlier this year announcing the appeal. “The Lehrer-Graiwers aren’t to blame for affordable housing shortages. On the contrary, their condominium project would add to the stock of housing. For city bureaucrats to punish them with an astronomical fee … for providing more housing isn’t just unconscionable, it’s unconstitutional.”
But lawyers for the City of West Hollywood stated in their court papers that the developers’ case is barred by the statute of limitations. They also stated that the fees were “lawfully imposed, both with respect to their amount and their timing.”
SCOTUSblog, the leading source for information on U.S. Supreme Court actions, notes that the review of the case could mean that one or more Justices wants to take a closer look at it; that one or more Justices is trying to pick up enough votes to grant a formal review (four are needed); that the Justices are writing a summary reversal (that is, a decision that the lower court opinion was so wrong that the Court can decide the case on the merits without briefing or oral argument), or that one or more Justices are writing a dissent from the decision to deny review.
The decision on the appeal is likely to have a significant impact on one side or the other.
“The case is the first reported appellate decision to rely upon the broad holding of the California Supreme Court’s blockbuster 2015 affordable housing case, California Building Industry Assn. v. City of San Jose, and it boldly highlights the far reaching implications of that ruling,” says Bryan Wenter of the Miller Star Regalia law firm’s land use group, referring to the appeal brought before the state Court of Appeal. “In my opinion, it also underscores the ongoing need for the United States Supreme Court to finally address whether the heightened scrutiny of the Nollan, Dolan, and Koontz Fifth Amendment takings cases applies to legislatively imposed permit conditions.”
In the California Building Industry Association case, the Supreme Court declined to review that industry association’s argument that the City of San Jose had no right to require a developer to set aside a certain percentage of a development for low- or moderate-income people or pay an in-lieu fee.
Wenter said the Croft Avenue property owners lost their earlier appeal because the city isn’t required to prove the reasonableness of its fee. An in-lieu housing fee is not viewed as an “exaction” fee under the Nollan and Dolan decisions, which would require justification as to its actual impact on West Hollywood’s need for affordable housing, Wenter said.